chapter 12

Question 1

individual’s economic worth, measured by the sum of the individual’s future earnings that is devoted to the individual’s family.

Answer 1

human life value approach

Question 2

method for determining how much insurance protection a person should have by analyzing a family’s or business’s needs and objectives should the insured die, become disabled, or retire.

Answer 2

human needs approach

Question 3

describes the ethical duty of a producer to sell a product that fits the needs of the prospect rather than the needs of the producer

Answer 3

needs-based selling

Question 4

agreements in which a business assumes the obligation of purchasing a deceased owner’s interest in the business, thereby proportionately increasing the interests of surviving owners.

Answer 4

entity plans

Question 5

protection of a business against financial loss caused by the death or disablement of a vital member of the company, usually individuals possessing special managerial or technical skill or expertise.

Answer 5

key person insurance

Question 6

arrangements between two parties where life insurance is written on the life of one party who names the beneficiary of the net death benefits (death benefits less cash value), and the other party is assigned the cash value, with both sharing premium payments.

Answer 6

split dollar plans

Question 7

each partner buys, pays the premiums, and is the beneficiary of a life insurance policy on each of the other partners.

Answer 7

cross purchase plans

Question 8

executive benefit an employer can use to pay a highly paid employee at a later date, such as upon disability, retirement, or death.

Answer 8

deferred compensation

Question 9

allow someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds before their death

Answer 9

viatical settlements