Insurance And

Question 1

What is term life insurance?

Answer 1

Provides coverage for a set period with no cash value.

Question 2

What is whole life insurance?

Answer 2

Permanent coverage with guaranteed death benefit and cash value.

Question 3

What is universal life insurance?

Answer 3

Permanent insurance with flexible premiums and investment options.

Question 4

What is variable life insurance?

Answer 4

Permanent insurance with market-linked investments.

Question 5

What is disability insurance?

Answer 5

Provides income if you can’t work due to illness or injury.

Question 6

What is long-term care insurance?

Answer 6

Covers costs for services like nursing homes or in-home care.

Question 7

What is umbrella insurance?

Answer 7

Adds extra liability protection beyond other policies.

Question 8

What is liability insurance?

Answer 8

Protects against legal responsibility for injury or property damage.

Question 9

What is homeowners insurance?

Answer 9

Covers property damage and personal liability for homeowners.

Question 10

What is renters insurance?

Answer 10

Covers personal property and liability for renters.

Question 11

What is a premium?

Answer 11

The cost paid for insurance coverage.

Question 12

What is a deductible?

Answer 12

The out-of-pocket amount before insurance pays.

Question 13

What is coinsurance?

Answer 13

Percentage of costs shared with insurer after deductible.

Question 14

What is a death benefit?

Answer 14

Money paid to beneficiaries when the insured dies.

Question 15

What is cash value in life insurance?

Answer 15

A savings component in permanent life policies.

Question 16

What is an elimination period?

Answer 16

The wait before benefits start in disability/LTC policies.

Question 17

What is own-occupation disability coverage?

Answer 17

Pays if you can’t do your specific job, even if you can do others.

Question 18

What is insurable interest?

Answer 18

You must have a financial/emotional stake in the insured.

Question 19

How much life insurance is recommended?

Answer 19

10–15× income, adjusted for debt and dependents.

Question 20

Why choose term over permanent insurance?

Answer 20

Cheaper and matches temporary financial responsibilities.

Question 21

When is permanent life insurance useful?

Answer 21

Estate planning, special needs trusts, or high net worth.

Question 22

Who needs disability insurance most?

Answer 22

Anyone relying on their income to live.

Question 23

When should LTC insurance be considered?

Answer 23

Late 50s to early 60s before premiums rise.

Question 24

Why do business owners need extra liability coverage?

Answer 24

They face higher legal and financial exposure.

Question 25

What are the four risk management strategies?

Answer 25

Avoid, reduce, transfer, retain.

Question 26

What does 'transfer risk' mean?

Answer 26

Use insurance to shift financial risk to an insurer.

Question 27

What does 'retain risk' mean?

Answer 27

Accepting the loss yourself, often for small risks.

Question 28

How do high deductibles reduce premiums?

Answer 28

You take more risk, so insurer charges less.

Question 29

Why recommend umbrella insurance?

Answer 29

It’s cheap and adds major liability protection.

Question 30

Analogy for life insurance?

Answer 30

Like a parachute—you hope you never need it, but if you do, it better work.

Question 31

Analogy for umbrella insurance?

Answer 31

Regular insurance is a raincoat. Umbrella coverage is a storm shield.

Question 32

Reframe for 'I don’t like paying for something I might not use.'

Answer 32

Insurance is about preventing ruin, not ROI.

Question 33

Analogy for disability insurance?

Answer 33

It’s like insuring your paycheck.

Question 34

Analogy for coinsurance?

Answer 34

Like splitting the check with your insurer.

Question 35

Reframe for high premium frustration?

Answer 35

You’re paying to transfer catastrophic risk, not avoid every bump.

Question 36

Analogy for insurance deductibles?

Answer 36

Like an entrance fee—you pay before the ride starts.

Question 37

What is an annuity?

Answer 37

A contract with an insurer that pays income for a lump sum or premium.

Question 38

What is an immediate annuity?

Answer 38

Starts paying income soon after deposit—used for retirement.

Question 39

What is a deferred annuity?

Answer 39

Delays income; allows tax-deferred growth.

Question 40

What is a fixed annuity?

Answer 40

Pays predictable income with principal protection.

Question 41

What is a variable annuity?

Answer 41

Invests in sub-accounts; returns depend on market.

Question 42

What is a fixed indexed annuity?

Answer 42

Tied to market index with limited gains and protection from losses.

Question 43

What is a lifetime income rider?

Answer 43

Guarantees income for life, even if value drops to zero.

Question 44

What risk do annuities protect against?

Answer 44

Longevity risk—outliving your money.

Question 45

Why are annuities criticized?

Answer 45

High fees, complexity, and limited flexibility.

Question 46

Analogy for annuities?

Answer 46

Turning savings into your own pension.

Question 47

What is an HSA?

Answer 47

A tax-advantaged medical savings account for those with HDHPs.

Question 48

What’s the triple tax benefit of HSAs?

Answer 48

Tax-deductible contributions, tax-free growth, and tax-free withdrawals.

Question 49

Who can contribute to an HSA?

Answer 49

Only people with high-deductible health plans.

Question 50

Can you invest HSA funds?

Answer 50

Yes—many providers offer investment options after a minimum balance.

Question 51

Do HSA balances roll over?

Answer 51

Yes—they are yours indefinitely.

Question 52

What’s the penalty for early, non-medical HSA withdrawals?

Answer 52

Tax + 20% penalty before age 65.

Question 53

What happens to HSAs after age 65?

Answer 53

Non-medical withdrawals are taxed like a Traditional IRA—no penalty.

Question 54

Why use HSAs for retirement?

Answer 54

They offer tax-free money for future healthcare costs.

Question 55

Analogy for HSAs?

Answer 55

A health IRA with superpowers—tax-free in, tax-free out.