Question

The text suggest that you should:

A. attempt to offset all losses with insurance

B. Attempt to self-insure all financial losses.

C. Self-insure major financial losses and only purchase insurance for minor losses.

D. You should self-insure against minor losses and only insure major losses.

With decreasing term insurance:

A. The surrender value of the policy decreases as the insured ages.

B. The cash value of the policy decreases as the insured ages.

C. The cost of the insurance decreases as the insured ages.

D. The face value of the insurance decreases as the insured ages.

Indemnification:

A. means that the insurance proceeds will return you to your pre-loss financial status.

B. means that your insurance company has first claim on any court-awarded damages.

C. permits the insurance company to sue you for negligence.

If a life insurance policy has a guaranteed insurability option:

A. the policy can be renewed with no change in premiums

B. the policy can be renewed for a higher face amount without a medical exam

C. the policy automatically renews each year

D. the coverage can be renewed for the same amount without a medical exam

D. only applies to auto policies covering the entire family

Answer 1

1) answer : D) You should self-insure against minor losses and only insure major losses. Self insurance is a risk management tool by which an individual/company sets aside a pool of money to be used to remedy an unexpected loss.

2) ans A) The surrender value of the policy decreases as the insured ages. Decreasing Term insurance is a policy in which the benefit amount keeps decreasing as the insured ages. It resembles the amortization of mortgage payment.

3) ans A) means that the insurance proceeds will return you to your pre-loss financial status.

4) ans B) the policy can be renewed for a higher face amount without a medical exam