Question

For the same amount of premiums in comparison to whole life insurance, term life insurance generally purchases

a.a greater amount of coverage.

b.less amount of coverage.

c.the same amount of coverage.

d.a higher deductible.

e.a lower deductible.

Annual Cost-of-Living-Adjustment (COLA) changes of coverage levels within long-term care insurance, disability insurance, or homeowner's insurance policies is generally deigned to protect policyholders against

a.the adverse event occurring.

b.lower rates of return.

c.lack of insurability.

d.the company defaulting on its payments.

e.inflation.

Over the course of several years, property and casualty insurance (e.g. homeowner's insurance, auto insurance) expects to encounter _________ claims from a customer, and health insurance expects to encounter ___________ claims from a customer.

a.frequent; frequent

b.frequent; infrequent

c.infrequent; frequent

d.infrequent; infrequent

e.ulcer-oriented; more ulcer-oriented

In a Term Life Insurance policy, as an individual continues with the policy over a number of years with a fixed level of coverage

a.the annual premiums will generally increase over time.

b.the annual premiums will generally decrease over time.

c.the annual premiums will generally stay the same over time.

d.the household's equity or wealth due to the policy will increase over time.

e.the household's equity or wealth due to the policy will decrease over time.

Answer 1

For the same amount of premiums in comparison to whole life insurance, term life insurance generally purchases (a) a greater amount of coverage.This is because a whole life insurance is providing coverage for the entire life span of a person whereas a term insurance only insures for a given term of choice. To compensate for the shorter term, the coverage is higher under a term insurance.

Annual Cost-of-Living-Adjustment (COLA) changes of coverage levels within long-term care insurance, disability insurance, or homeowner's insurance policies is generally deigned to protect policyholders against (e) Inflation. Due to inflation over the long term of a contract, the coverage might not ensure the expected level of standard of living for the insured person. To safegaurd against this some policies provide Annual Cost-of-Living-Adjustment (COLA).

Over the course of several years, property and casualty insurance (e.g. homeowner's insurance, auto insurance) expects to encounter frequent claims from a customer, and health insurance expects to encounter infrequent claims from a customer. It is empirically seen that property and casualty insurances witnesses greater number of claims, this is due to the fact that there can be innumerable ways in which such claims can be triggered, eg. theft, accident, fire, etc. Whereas a health insurance generally witnesses lower number of claims as by nature health problems do not occur so frequently (as does property claims).

In a Term Life Insurance policy, as an individual continues with the policy over a number of years with a fixed level of coverage (a)the annual premiums will generally increase over time. This is because as a person ages, his/her mortality rate goes on increasing and thus there is a higher probability of a claim occurence. To adjust for this higher expected claim rate, higher premiums are charged.