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Questions and Answers
What is the purpose of life insurance?
What is the purpose of life insurance?
Life insurance is intended to pay an amount of money to the beneficiary (heir or third party beneficiary) upon death of the insured.
Which of the following is NOT a circumstance covered by life insurance?
Which of the following is NOT a circumstance covered by life insurance?
Life insurance only provides coverage against risks associated with individuals, not groups.
Life insurance only provides coverage against risks associated with individuals, not groups.
False
What are the two main types of life insurance based on duration?
What are the two main types of life insurance based on duration?
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Which type of life insurance is considered "pure" insurance and does not include a saving element?
Which type of life insurance is considered "pure" insurance and does not include a saving element?
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Term life insurance premiums are typically higher than those for permanent life insurance.
Term life insurance premiums are typically higher than those for permanent life insurance.
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What is the primary advantage of whole life insurance?
What is the primary advantage of whole life insurance?
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What is the key difference between universal life insurance and variable life insurance?
What is the key difference between universal life insurance and variable life insurance?
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What is the primary purpose of variable universal life insurance?
What is the primary purpose of variable universal life insurance?
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Which of the following is NOT typically covered under a term life insurance policy?
Which of the following is NOT typically covered under a term life insurance policy?
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Endowment life insurance pays a death benefit only if the insured dies within a specified period.
Endowment life insurance pays a death benefit only if the insured dies within a specified period.
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Explain the purpose of an annuity insurance or pension insurance.
Explain the purpose of an annuity insurance or pension insurance.
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Which of these factors is NOT typically involved in determining the premium for an annuity?
Which of these factors is NOT typically involved in determining the premium for an annuity?
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Variable annuities are guaranteed to provide a specific rate of return.
Variable annuities are guaranteed to provide a specific rate of return.
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What is the key difference between a term annuity and a perpetual annuity?
What is the key difference between a term annuity and a perpetual annuity?
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Health insurance is typically mandatory in all countries.
Health insurance is typically mandatory in all countries.
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What are the two main functions of health insurance?
What are the two main functions of health insurance?
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Which of these expenses is NOT typically covered by health insurance?
Which of these expenses is NOT typically covered by health insurance?
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Health insurance is only available through single-person policies.
Health insurance is only available through single-person policies.
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What is the primary focus of future developments in health insurance?
What is the primary focus of future developments in health insurance?
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Which of these is NOT a common example of coverage under a health insurance policy?
Which of these is NOT a common example of coverage under a health insurance policy?
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Study Notes
Life Insurance
- Life insurance is designed to pay a sum of money to a beneficiary upon the death of the insured person.
- It covers risks associated with a person's life, such as death, accidents, illness, disability, or the occurrence of other specific events.
- Life insurance also encompasses personal accident insurance.
- Risks covered include death due to illness or accident, temporary or permanent disability, and temporary or lifetime payments for annuities, pensions, and healthcare costs.
Types of Life Insurance
- Term insurance (Pure insurance protection): A temporary policy with a fixed premium and sum insured for a specific period (e.g., 10, 20 years). It doesn't include a savings element. If the insured survives the term, no payout is made.
- Cash value insurance (Protection and saving): Policies offering a savings component, along with life insurance protection.
- Whole-life insurance: A permanent policy providing coverage throughout the insured's life, typically with fixed premiums. Includes a cash value component.
- Endowment insurance: A permanent policy that pays out a lump sum at a predetermined date (e.g., end of a specified period) along with life insurance protection and cash value.
- Universal life insurance: A permanent policy that allows for flexibility in premium payments and investment options, with fluctuating cash values based on interest rates and investment performance.
- Variable life insurance: A permanent policy providing life insurance with the ability to invest premiums in a variety of market-based investments. The policy's value fluctuates based on investment performance.
- Variable universal life insurance: Combines the features of universal life insurance (flexibility in premium payments) and variable life insurance (investment options) in a permanent policy.
Annuity Insurance
- Annuity insurance is a contract between an insurance provider and an annuitant.
- It's an investment or savings product intended to create a stream of income, often in the annuitant's retirement years.
- Annuities can be temporary (ending after a specified period) or perpetual (continuing indefinitely).
Health Insurance
- Health insurance protects individuals against medical expenses arising from illness, injury, or disability.
- It plays a crucial role in providing care and financial protection related to medical needs.
- This coverage can be through a single or group policy, and is generally structured for the payment of medical and healthcare services.
- It may encompass, through multiple schemes, both payment for care and preventative treatments.
Example Coverages of Health Insurance
- Outpatient medical help (e.g., examinations, tests, medical consultations, etc.)
- Hospital medical help (e.g., consultations with specialists, hospital stays, surgery, etc.)
- Emergency medical care (e.g., emergency treatment, etc.)
- Additional coverage packages might include rehabilitation, medical transport, supplies for specific procedures, and preventive care.
Excluded Risks
- Various conditions (e.g., suicide attempts, alcohol-related issues, certain chronic illnesses, etc.) and activities (dangerous sports) can be excluded from coverage.
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Description
Explore the fundamentals of life insurance, including its purpose, types, and the various risks it covers. This quiz delves into term insurance, cash value insurance, and whole-life insurance, helping you understand how these policies work. Test your knowledge and learn more about protecting your financial future.
