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10 Cards in this Set
- Front
- Back
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What is the purpose of life insurance? |
To protect someone who depends on the insured from financial loss related to the insured's death. Life insurance is one of the few ways to provide liquidity at the time of death. |
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What is the income replacement method of estimating life insurance requirements? |
Typically 70% of the insured's salary for 7 years. Assumes a "typical" family with NO liquid assets. |
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What is the "family need" method of estimating life insurance requirements? |
More thorough because it considers employer-provided insurance, government benefits, income, and assets |
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What is term life insurance? |
Protection for a specified period of time -Does not have a pay-out at the end if person still alive -Cheaper option |
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What is permanent life insurance? |
Purchased to cover lifelong needs |
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Factors affecting life insurance premium |
-Amount of insurance -Health class -Age -Gender -Marital status -Occupation -Recreation |
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What is disability income? |
Provides payment to replace income when an insured person is unable to work due to accident or illness. |
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Disability insurance trade-offs |
-Waiting or elimination period -Duration of benefits -Amount of benefits -Accident and sickness coverage -Guaranteed renewability |
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Sources of disability income (3) |
-Employer -Private -Public |
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Health insurance trade-offs (4) |
-Reimbursement VS indemnity -Internal limits VS aggregate limits -Deductible and co-insurance -Out-of-pocket limit |
