Insurance and Protection Planning Flashcards

A client wants pure death benefit protection for a set number of years at the lowest cost. Which type of life insurance is most appropriate?

Answer: Term life insurance

Term life insurance provides a death benefit for a specified period and has the lowest premiums because it has no cash value component.

Which of the following best describes the underwriting process in insurance?

Answer: Evaluating applicants to determine insurability and premium rates

Underwriting is the process insurers use to assess risk, determine eligibility, and set appropriate premium rates for applicants.

A client has a $1,000 deductible on their health insurance plan. They incur $4,500 in covered medical expenses. How much does the insurer pay (assuming 100% coverage after deductible)?

Answer: $3,500

The client pays the first $1,000 (the deductible), and the insurer covers the remaining $3,500.

Which life insurance product builds cash value on a guaranteed basis and has fixed premiums?

Answer: Whole life

Whole life insurance offers a guaranteed cash value accumulation, fixed premiums, and a permanent death benefit.

Disability income insurance is primarily designed to replace what percentage of a worker's pre-disability earned income?

Answer: 50–70%

Most disability income policies are designed to replace 50–70% of pre-disability income to encourage return to work and remain cost-effective.

In a life insurance policy, who is the 'beneficiary'?

Answer: The person or entity designated to receive the death benefit

The beneficiary is the individual or entity named to receive the policy's death benefit upon the insured's death.

Which type of insurance provides coverage for expenses related to custodial and skilled nursing care that health insurance typically excludes?

Answer: Long-term care insurance

Long-term care insurance specifically covers the costs of custodial care, assisted living, and nursing home care not covered by standard health or Medicare plans.