Policy and Company Selection

Question 1

Some problems affecting insurance companies

Answer 1

-increased competition
-shrinking profit margins
-bad investments
-mismanagement

Question 2

Why are problems affecting insurance companies important?

Answer 2

Because insurance in a promise to pay . Will the company be around when it’s time to pay out?

Question 3

What helps determine the type and amount of insurance someone needs

Answer 3

Needs analysis - guards against over-insuring and paying excess premiums

Question 4

What does a needs analysis do?

Answer 4

guards against over-insuring and paying excess premiums

Question 5

In general how long should life insurance last

Answer 5

until the insured has met all family obligations

Question 6

How long should disability coverage last?

Answer 6

Until the insured reaches age 65 or has sufficient assets or other sources of income

Question 7

What can you receive with a participating insurance contract

Answer 7

dividends

Question 8

What do dividends represent

Answer 8

the difference between the premiums recieved and operating/mortality expenses of the co

Question 9

Nonparticipating policy

Answer 9

no dividends are paid out

Question 10

Cost benefit analysis of different insurance policies does what

Answer 10

-compares similar provisions in policies
-compares company ratings

Question 11

First thing to look for when selecting insurance company

Answer 11

Company’s financial strength

Question 12

Are insurance company ratings standardized?

Answer 12

No

Question 13

Underwriting consists of what

Answer 13

process where insurance company determines whether and on what basis it will accept the application

Question 14

Underwriting is based on what

Answer 14

adverse selection and risk exposure to the insurance co