FFC Insurance and Protection Planning 3

Question 1

The 'face amount' (or face value) of a life insurance policy refers to:

Accepted Answer

The death benefit amount stated in the policy

Answer

The face amount is the stated death benefit that the insurer agrees to pay the beneficiary upon the insured's death.

Question 2

A 'rider' added to an insurance policy is best described as:

Accepted Answer

An amendment that modifies or adds benefits to the base policy

Answer

A rider is an optional provision added to an insurance policy that modifies coverage, often adding benefits such as waiver of premium or accidental death.

Question 3

Business overhead expense (BOE) insurance is designed to cover which costs during a business owner's disability?

Accepted Answer

Fixed business operating expenses such as rent, utilities, and staff salaries

Answer

BOE insurance reimburses a disabled business owner for ongoing fixed operating expenses, helping keep the business running while they are unable to work.

Question 4

The elimination period in a disability income insurance policy functions most similarly to:

Accepted Answer

A deductible expressed in time rather than dollars

Answer

The elimination period is a waiting period after disability onset before benefits begin, analogous to a time-based deductible.

Question 5

When evaluating a property insurance claim, 'actual cash value' (ACV) differs from 'replacement cost value' (RCV) in that ACV:

Accepted Answer

Deducts depreciation from the replacement cost of the damaged item

Answer

ACV compensates the insured for the item's replacement cost minus depreciation, whereas RCV pays the full cost to replace the item with a new equivalent.

(FFC) Financial Fitness Coach Certification Practice Test

(FFC) Financial Fitness Coach Certification Practice Test

FFC Insurance and Protection Planning 3