Ch 8/9 Questions Flashcards
What is the primary function of Insurnace?
The primary function of insurance is to maintain your existing level of wealth by protecting you against potential financial losses or liability as a result of unexpected events.
How can individuals benefit from Insurance?
Individuals benefit from having insurance even when you do not receive any payments from the Insurance company because you have the peace of mind of knowing that your assets are protected should you suffer a loss.
What is risk management?
Risk management represents decisions about whether and how to protect against risk.
What are the four risk management alternatives?
Avoiding risk - i.e. property damage - not owning property
Reducing Risk - property damage - owning less property
Accepting risk - straight forward
Sharing risk - share risk by purchasing insurance
what does auto insurance insure against?
auto insurance insures against the legal liability that may arise from causing death or injury to others; the expense associated with providing medical care to you, your passengers, and other persons outside your vehicle; and the costs associated with damage to your automobile.
What is a deductible?
A deductible is a set dollar amount that you are responsible for paying before any coverage is provided by your insurer.
What is the difference between all perils coverage and named perils coverage?
All perils coverage protects the home and any other structures on the property against all events except those that are specifically excluded by the homeowner’s policy, whereas named perils coverage protects the home and any other structures on the property against only those events named by the homeowner’s policy.
What is the purpose of the disability income insurance?
Disability income insurance provides a monthly insurance benefit in the event that you are unable to work as a result of an injury or an illness.
What is the difference between the “regular occupation” and “any occupation” definitions of disability
Regular occupation will provide benefits if you are unable to do the duties required of your occupation. However, your benefits will be reduced if you find employment elsewhere. the “any occupation” coverage will only provide benefits if you cannot do the duties of any job that fits your education or expereince.
Define and describe the waiting period and the benefit period.
The waiting period refers to the period from the time you become disabled until you begin to receive disability income benefits. An individual must cover their expenses during the waiting period. the premium for disability insurance is higher for short waiting periods. The benefit period refers to how long benefits will last. Disability benefits may be limited to a few years or may last for the policy owner’s lifetime. The longer the period over which your policy provides disability income, the more you will pay for disability insurance. The most common length of time is to age 65.
What is term to 100 insurance?
Term to 100 insurance is a form of permanent insurance that was designed for the single purpose of providing a benefit at death. In most cases, the policy owner does not need to pay premiums if he or she lives beyond the age of 100.
What are the benefits of building cash value inside a permanent life insurance policy?
In the event of the death of the policy owner, the death benefit, which may include a cash value, would be available to the beneficiary to cover things like taxes payable at death on registered and tax-deferred non-registered investments, gifts to charity, or on an income stream for mentally and/or physically incapacitated loved ones.
