Question: The basic purpose of insurance is to _____.

​protect your health

​protect yourself from economic losses

​supplement your income

​shield you from bad decisions

​protect yourself from non-financial losses

Answer: protect yourself from economic losses

Question: The purchase of insurance is a common form of _____ by the insured.

​risk retention

​risk transfer

​risk assumption

​risk avoidance

​loss control

Answer: risk transfer

Question:

Answer: ​the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.

Question: The probability of a loss occurring can be reduced by_____.

​risk observance

​loss prevention

​risk assumption

​risk retention

​insurance

Answer: ​loss prevention

Question: The primary purpose of life insurance is to provide:

​financial security for dependents in the event of death.

​protection from creditors and lawsuits.

​tax-advantaged investments.

​high-yield investments.

​liquidity to expand business operations.

Answer: financial security for dependents in the event of death.

Question: Actuarial data is used to measure:

​the creditworthiness of a population.

​the risk of loss for a population.

​the wealth of a population.

​the gross productivity of a population.

​the consumer price index of a population.

Answer: the risk of loss for a population.

Question: _____ is an activity that reduces the chance that a loss will occur.

​Risk avoidance

​Loss prevention

​Loss control

​Risk assumption

​Premium collection

Answer: ​Loss prevention

Question:

Answer: assessing the family’s total economic needs and subtracting the financial resources available to meet those needs.

Question:

Answer: ​The multiple-of-earnings method considers the insurance coverage to be 5 to 10 times the annual income.

Question: Term life insurance is characterized by _____.

​level annual premiums throughout one’s life

​premium amounts related to age

​its inappropriateness for most people’s life insurance needs

​non-convertibility

​cash value

Answer: ​premium amounts related to age