Question

1. All of the following are steps in evaluating life insurance needs based on the expense approach EXCEPT:

a)a pay off amount of any debts

b)estimating the economic value of home production done by the insured family member

c)Social Security survivor's benefits

d)the potential for their children or surviving spouse to pick up some of the "economic slack" by earning additional incomed)

E)All of the above are included in the expense approach

2. Which of the following scenarios best shows the Large Loss Principle as expressed in lectures:

a)Self insuring for smaller losses and purchasing insurance for large losses

b)Having a shorter waiting period for disability insurance

c)Including the value of the land in the amount of coverage on a homeowner's policy

d)Having a low deductible health insurance policy

e)Having comprehensive and collision coverage above the value of your car

3. Brad graduates and gets a job at a local accounting office. The first day of work he gets a quick orientation of the office procedures. Which of the following statements is true regarding Brad's training?

a)This type of training should be underwritten by the employer because Brad can't use that training anywhere else.

b)Brad received general on the job training

c)Brad should have to pay for the training because he will be the only one getting a benefit from it.

d)Brad received formal training from his employer.

e)Brad's employer should require Brad to sign an agreement to repay the firm for the training if he does not work there for at least six months.

4. Which of the following is NOT a cost directly related to having children?

a)Shared enjoyment activities

b)Out of pocket expenses

c)Opportunity cost of time spent with children

d)Direct child care time

e)All of the above are costs of having children

Answer 1

1. All of the following are steps in evaluating life insurance needs based on the expense approach EXCEPT:

E)All of the above are included in the expense approach

2. Which of the following scenarios best shows the Large Loss Principle as expressed in lectures:

a)Self insuring for smaller losses and purchasing insurance for large losses

Because, A rule for buying insurance such that serious loss exposures receive priority over less serious loss exposures.

3. Brad graduates and gets a job at a local accounting office. The first day of work he gets a quick orientation of the office procedures. Which of the following statements is true regarding Brad's training?

b)Brad received general on the job training

4. Which of the following is NOT a cost directly related to having children?

c)Opportunity cost of time spent with children

Reason: Opportunity Costs are not direct cost, they are cost of next best alternative, in this case it means the if not spending time with children the person can do something other which can give him money or pleasure.