Question 1

Life insurance may not be necessary if

Accepted Answer

Life insurance is primarily to provide financial support to dependents in the event of one's death. If you don't have dependents, are part of a double-income couple without children, aren't employed (and thus may not contribute financially), or are retired (presumably with savings and no dependent children), life insurance may not be necessary.

Question 2

The Patient Protection and Affordable Care Act was signed into law in 2010; however many of its aspects do not go into effect until 2020.

Accepted Answer

The majority of the provisions in the Affordable Care Act went into effect between 2010 and 2014. Some aspects, such as the employer mandate and the individual mandate penalty, were delayed until 2015. However, there are no major provisions that are set to go into effect in 2020.

Question 3

An insurance policy is a contract with an insurance company that spells out what losses are covered, what the policy costs, and who receives the payment if a loss occurs.

Accepted Answer

This statement accurately describes what an insurance policy is.

Question 4

The individual designated by the owner of the life insurance policy to receive the policy's proceeds upon the death of the insured is called the

Accepted Answer

The beneficiary is the person designated by the policy owner to receive the proceeds of the life insurance policy upon the death of the insured. The policy holder is the person who owns the policy, the insured is the person whose life is insured, and an actuary is a professional who assesses financial risk and uncertainty.

Question 5

Andrew and Alice have health issues that may be passed on to their children. When the children are born would they be wise to obtain life insurance immediately on the infants prior to any of the medical conditions arising?

Accepted Answer

Obtaining life insurance for the infants as soon as possible would be wise because they are unlikely to have to pass a physical exam, which could potentially result in them being denied coverage or having to pay higher premiums due to their pre-existing health conditions. Waiting until the child is an adult could also mean that they are unable to obtain affordable or any coverage due to their health issues.

Question 6

Statisticians who specialize in estimating the probability of death based on personal characteristics are called

Accepted Answer

Statisticians who specialize in estimating the probability of death based on personal characteristics are called actuaries. Morbidity analysts focus on the incidence and prevalence of diseases, while insurance analysts may work on a variety of tasks related to insurance, including risk assessment but not necessarily focused on mortality. Morbidity statisticians may work on analyzing disease trends and patterns.

Question 7

Actuaries are statisticians who specialize in estimating the probability of death based on personal characteristics, such as your age and general health, as well as lifestyle specifics such as whether or not you exercise.

Accepted Answer

This statement is true. Actuaries use statistical methods to estimate the likelihood of events, including death, based on various factors such as age, health, and lifestyle.

Question 8

Why is the beneficiary decision so important when buying life Insurance?

Accepted Answer

The answer of Why is the beneficiary decision so important...

Question 9

The beneficiary is the individual designated by the owner of the life insurance policy to receive the insurance policy's proceeds upon the death of the insured.

Accepted Answer

This is a true statement.

Question 10

Life insurance is not meant to benefit you, its purpose is to protect others in the event of your death.

Accepted Answer

Life insurance is a form of protection for your loved ones and beneficiaries in case of your unexpected death. It provides financial support to help cover expenses such as funeral costs, outstanding debts, and living expenses that they may have trouble paying without your income. The primary goal is not to benefit the policyholder, but to safeguard those who depend on them.

Question 11

Life insurance and health insurance are designed to transfer the catastrophic risk you can't afford to keep onto the insurance companies.

Accepted Answer

Both life insurance and health insurance are meant to protect individuals from financial ruin due to unexpected and costly events such as serious illnesses or death. By paying a monthly premium, individuals transfer the financial risk onto the insurance company. Therefore, the statement is true.

Question 12

Wayne and Sarah are trying to manage the risk they face in life a best as they can. They are following Principle 7 which states:

Accepted Answer

Protecting oneself against major catastrophes is the most important aspect of risk management. By doing so, one can minimize the potential damage that could occur from a significant event. This also aligns with the concept of risk avoidance, which is one of the most effective ways to manage risk. While the other principles are also important, they may not address major catastrophic events in the same way.

Question 13

Why is being the Policy owner so important?

Accepted Answer

The answer of Why is being the Policy owner so...

Question 14

Currently only 10% of Americans receive some type of government health care entitlements such as Medicaid or Medicare.

Accepted Answer

According to the Kaiser Family Foundation, as of 2020, approximately 34% of Americans receive government health care entitlements such as Medicaid, Medicare, or military health care.

Question 15

What are some good reasons for a young, healthy, single person to purchase life insurance?

Accepted Answer

The answer of What are some good reasons for a...

Question 16

All life insurance policies should have a contingent beneficiary designated.

Accepted Answer

It is recommended for all life insurance policies to have a contingent beneficiary designated in case the primary beneficiary is not able to receive the benefits or passes away before the insured. This ensures that the benefits go to a secondary beneficiary in the event of unexpected circumstances.

Question 17

In dealing with risk, one can either avoid it, manage it, or transfer it for a fee.

Accepted Answer

This statement is true. When it comes to risk, individuals or organizations have the option to avoid it altogether (such as not pursuing a risky investment), manage it by implementing risk mitigation strategies (such as diversifying their portfolio), or transfer it to someone else in exchange for a fee (such as purchasing insurance).

Question 18

What is the main purpose of life insurance?

Accepted Answer

The answer of What is the main purpose of life...

Question 19

Sharing the financial consequences associated with risk in the insurance industry is sometimes called

Accepted Answer

Risk pooling refers to the practice of sharing the financial consequences associated with risk in the insurance industry. It involves collecting premiums from policyholders and using those funds to pay out claims when a covered event occurs. By pooling the risk, the insurer is able to absorb the financial impact of uncertain events without any one policyholder having to bear the full cost of a loss. This helps to spread the risk across a larger group and make insurance more affordable and accessible for everyone.

Question 20

One of the reasons insurance is so expensive is due to the expense of developing, testing and verifying new drugs. This cost is passed on to consumers.

Accepted Answer

Developing, testing and verifying new drugs is a costly process, and these expenses are factored into the cost of healthcare and insurance, ultimately passed on to consumers.

Quiz 9: Life and Health Insurance