EBU 1063 Smart Money Management LECTURE 5: Insurance

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Questions and Answers

What is the purpose of life insurance?

To provide retirement benefits for policy holders

To offer discounts on medical expenses for policy holders

To provide financial support to policy holders in case of hardship (correct)

To invest money for policy holders to earn interest

What is the primary source of funds for managing life insurance policies?

Government subsidies

Donations from insurance companies

Premiums paid by policy holders (correct)

Investment returns from the stock market

What do policy holders receive from the life insurance fund when they suffer hardship?

Discounted premiums for future coverage

An amount of money to help ease the hardship (correct)

Free medical treatment for a certain period

Investment opportunities in the insurance company

What is the main focus of healthcare insurance programs?

Providing comprehensive medical coverage for policy holders Signup and view all the answers

What is the purpose of disability insurance?

To provide income protection in case of disability Signup and view all the answers

What do long-term care insurance policies aim to cover?

Costs associated with extended care and assistance for policy holders Signup and view all the answers

Which type of life insurance combines protection and savings?

Endowment insurance Signup and view all the answers

Under what condition will the money be paid in term insurance?

If the policyholder suffers total and permanent disability Signup and view all the answers

What is the purpose of cash-value insurance?

To combine protection and savings Signup and view all the answers

When does life insurance not make sense according to the text?

When you're single and don't have any dependents Signup and view all the answers

When should one consider life insurance?

If you're married but aren't employed Signup and view all the answers

What is a reason provided in the text to ensure you have life insurance?

To allow your family to maintain their standard of living upon your demise Signup and view all the answers

What type of insurance offers pure life insurance that pays a beneficiary a specific amount of money if the policyholder dies while covered?

Term insurance Signup and view all the answers

What is a valid reason for not wanting or needing life insurance according to the text?

If you're single and don't have any dependents Signup and view all the answers

Under what condition will endowment insurance pay out the money?

If you pass away during the term of the policy Signup and view all the answers

What is one factor mentioned in the text that indicates you probably need life insurance?

If you're married, a single-income couple, with no children Signup and view all the answers

Study Notes

Life Insurance

The purpose of life insurance is to provide financial protection to beneficiaries in the event of the policyholder's death.
The primary source of funds for managing life insurance policies is the premiums paid by policyholders.

Benefits and Protections

Policyholders who suffer hardship may receive financial assistance from the life insurance fund.
The main focus of healthcare insurance programs is to provide medical coverage and protection.
The purpose of disability insurance is to provide financial support to individuals who become unable to work due to illness or injury.

Types of Insurance

Whole life insurance combines protection and savings.
Term insurance pays out the money if the policyholder dies during the specified term.
Cash-value insurance allows policyholders to accumulate a cash value over time, which can be borrowed against or used to pay premiums.

Considerations

Life insurance may not make sense if the policyholder has no dependents and sufficient savings to cover final expenses.
One should consider life insurance when they have dependents, outstanding debts, or final expenses that need to be covered.
A reason to ensure you have life insurance is to provide financial security for your loved ones in the event of your death.
Term life insurance offers pure life insurance that pays a beneficiary a specific amount of money if the policyholder dies while covered.
A valid reason for not wanting or needing life insurance is if you have no dependents and sufficient savings to cover final expenses.

Endowment Insurance

Endowment insurance pays out the money if the policyholder dies or reaches a specific age (e.g. 65).

Factors to Consider

If you have dependents, you probably need life insurance.

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Description

Test your knowledge on life and health insurance, property and liability insurance, and the importance of insurance. Learn about determining life insurance needs, healthcare insurance, and disability insurance.