Insurance and Risk Management Flashcards
6 cards from real CFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Insurance and Risk Management flashcards as text
Which type of life insurance provides permanent coverage and builds cash value through a separate investment account?
Answer: Variable universal life (VUL) insurance
Variable universal life insurance combines permanent coverage with investment subaccounts, allowing policyholders to allocate cash value to equity or bond funds.
A disability income policy with an 'own-occupation' definition covers a claimant who:
Answer: Cannot perform the specific duties of their own occupation
An own-occupation definition pays benefits if the insured cannot perform the duties of their specific occupation, even if they can work in another field.
Which long-term care insurance (LTCI) benefit trigger requires that a claimant be unable to perform a specified number of Activities of Daily Living (ADLs)?
Answer: 2 out of 6 ADLs
Most LTCI policies and Medicaid require inability to perform at least 2 of 6 standard ADLs (bathing, dressing, eating, transferring, toileting, continence) to trigger benefits.
An 'umbrella' liability insurance policy primarily provides:
Answer: Excess liability coverage above underlying home and auto policy limits
Personal umbrella policies extend liability coverage beyond the limits of underlying homeowners and auto policies, protecting against large judgments or settlements.
Which annuity type guarantees a fixed income payment for life regardless of how long the annuitant lives?
Answer: Life-only (straight life) annuity
A life-only annuity provides guaranteed income payments for the annuitant's lifetime, with payments ceasing at death — maximizing income but providing no death benefit.
The human life value approach to life insurance need analysis estimates coverage based on:
Answer: The present value of the insured's future earnings stream
The human life value approach calculates insurance need as the present value of future net earnings the insured would have generated for their family.