Question

1. Does everyone need life​ insurance?  ​(Select the best answer​ below.)

		a. Yes, all people need life insurance.
		b. No, only those with children need life insurance.
		c. No, only those with financial dependents need life insurance.
		d. Yes, all legal adults need life insurance.

2.

What is term​ insurance? What factors determine the premium for term​ insurance? What is​ decreasing-term insurance?

Term​ insurance:     ​(Select the best answer​ below.)

		a. serves as an investmentserves as an investment.
		b. provides insurance for the term of employment.
		c. provides protection over the specified periodprovides protection over the specified period.
		d. provides insurance for the term of the investment.

3. The factors that determine the premium for term insurance​ include:  ​(Select the best answer​ below.)

		a. eduational leveleduational level.
		b. religious affiliationreligious affiliation.
		c. geographic locationgeographic location.
		d. length of time coveredlength of time covered.

4.

Why is the premium paid for whole life higher than the premium paid for term​ life? What alternative approach to purchasing life insurance might provide the same benefits as whole​ life?

The premium paid for a whole life policy is higher than the premium for term life​ because:     ​(Select the best answer​ below.)

		a. regulators set the premium prices.
		b. he insured values for whole life policies are higher.
		c. term life insurance policies are not available to everyone.
		d. whole life insurance provides both insurance protection and savings.

Answer 1

Life insurance is needed by everyone. But people nowadays opt for term insurance. Life insurance is needed when you have financial dependent.

In case a person has children or other members dependent on him, then hi surely needs life insurance. If a person has no one, then after he dies no one will be there to collect the insurance amount. Hence no policy needed.

Life insurance is needed by those who have financial dependents.

Option C

Term insurance provides protection only upto a certain age unlike life insurance which protects till death or maturity. It is not based on employment. It is also not a source of investment.

A lot of factors determine term insurance like age, occupation, location, history of diseases, family history, etc. Decreasing term insurance means term insurance coverage decreases over the life of policy. Usually premium is fixed. However in such case premium and coverage both reduce.

Term insurance provides protection over a specified period.

Option C

A lot of factors determine term insurance premium like age, period covered, geography, etc.

But most important factor is length of period covered. If term insurance is taken upto age of 75 then premium will be less as compared to taken upto age of 99.

Geography also affects depending upon whether a person is located at any area prone to disasters.

But length of time covered is the most important factor.

Option D

Premium paid on whole life is higher then premium paid on term life because life insurance provides both protection and savings.

An alternative would be to take a term insurance and invest the difference in premium between term and life insurance at any other place.

Hence it offers both protection and savings hence more premium for life insurance as compared to term insurance.

Option D