Madisen Norton 2nd Period 1) How are the concepts of the risk-return trade-off, risk pooling, and the

work of actuaries a foundation for the logic of insurance as well as the premium you will ultimately pay? They are a foundation because if you don't use the risk-return trade-off, and risk pooling, then your family may not be covered if you die. 2) Define the following life insurance terms: Beneficiary, face amount, insured, policy-holder, and policy owner. How are these terms related? Beneficiary: The individual designated to receive the insurance policy's proceeds upon the death of the insured. Face Amount: the amount of insurance provided by the policy at death. Insured: the person whose life is insured by the life insurance policy. Policyholder/Policy Owner: The individual or business that owns the life insurance policy. These terms are related because they all relate to your life and death being covered by insurance. 3) How does the Affordable Care Act address the issue of individuals with no health insurance? What Percentage of Americans are expected to have health insurance by the time the act is fully implemented? It will provide health coverage to over 32 million Americans who are currently without health insurance, and as a result over 95 percent of Americans will then have health care insurance. 4) What is the main purpose of life insurance? Describe the types of households that need life insurance and those that do not. Summarize the underlying factors that determine the need for life insurance. The main purpose of life insurance is to protect your family in case you die. All households need life insurance incase a family member dies, majority of households that need life insurance are those with children. How much money you make, if your spouse has a job and is going to school or not, if you have children who are unable to be fully dependent at the time. 5) Compare and contrast the two basic approaches used to determine the amount of life insurance needed. What are the primary factors considered? The probability of your death, and the number of individuals depending upon you at the time of death. 6) Briefly describe five common types of term life insurance. Term Insurance: a type of insurance that pays your beneficiary a specific amount of money if you die while covered by the policy. Cash-Value Insurance: a type of insurance that has two components: Life insurance and a savings plan. Renewable Term Insurance: a type of term insurance that can be renewed for an agreed-upon period or up to a specified age (usually 65 or 70) regardless of the insured's health. Decreasing Term Insurance: term insurance in which the annual premium remains constant but the face amount of the policy declines each year. Group Term Insurance: term insurance provided, usually without a medical exam, to a specific group of individuals, such as company employees, who are associate for some purpose other than to buy insurance. Credit or Mortgage Group Life Insurance:

group life insurance that's provided by a lender for its debtors. Convertible Term Life Insurance: term life insurance that can be converted into cash-value life insurance at the insured's discretion regardless of his or her medical condition and without a medical exam. Whole Life Insurance: cash-value insurance that provides permanent coverage and a death benefit when the insured dies. If the insured turns 100, the policy pays off, even though the insured hasnt died. Universal Life Insurance: a type of cash-value insurance thats much more flexible that whole life. It allows you to vary the payments and the level of protection. Variable Life Insurance: Insurance that provides permanent insurance coverage as a whole life does; however, the policyholder, rather than the insurance company, takes on the investment risk. 10) What is a policy rider? Describe five commonly available life insurance policy riders. Policy Rider: a special provision that may be added to your policy, which either provides extra benefits to the beneficiary or limits the company's liability under certain conditions. Waiver of Premium for Disability Rider: this type of rider allows your protection to stay in place by paying your premium if you become disabled before you reach a certain age, usually 65. Accidental Death Benefit Ride or Multiple Indemnity: an accidental death benefit rider increases the death benefit--doubling it in the case of "double indemnity" or tripling it in "triple indemnity"--if you die in an accident rather than from natural causes. If is usually an inexpensive rider because of the slim chance that the insurance company will ever have to pay it off. Guaranteed Insurability Rider: a guaranteed insurability rider givers the right to increase your life insurance protection in the future without a medical exam regardless of your health. It allows you to purchase additional coverage at specified times such as after the birth of a child, when you buy a house, or if you increase your business. It is insurance against future uninsurability and is a relatively inexpensive way to insurance that you can get the additional coverage that you might need. Cost-of-Living Adjustment (COLA) Rider: this rider increases your death benefits at the same rate as inflation without forcing you to pass a new medical exam, allowing you to keep up wit expected increases in the cost of living. Living Benefits Rider: some cash-value policies allow for "living benefits" that grant an early payout of a percentage of the anticipated death benefits to the terminally ill insured. Is usually requires a doctor's statement saying that you have 6 months to a year to live. These payments are made to the policyholder, not the beneficiary. This rider can often be added to a policy at any time, generally with no extra fee, and can offer peace of mind at a critical time by helping to offset medical costs. 13) When shopping for life insurance, what key factors should you consider when comparing companies, agents, and cash-value and term policies? How could the Internet assist you? You should consider looking at a number of insurance rating services to rate the ability of insurance companies to pay off claims. The internet can assist you by going to the insurance rating services' sites. 16) Define: coinsurance and deductible. Coinsurance: an insurance provision that defines the percentage of each claim that the insurance company will pay. Deductible: The amount of expenses that the insured must pay before the insurance company will pay an insurance benefits.

20) Describe the major differences between group health insurance and individual health insurance. Which is likely to be cheaper? Group usually has pre-employed doctors that you can go to, with individual you go to your regular doctor. Individual is likely to be cheaper because you pay the same amount on each type of appointment where with group insurance it could vary from appointment type to appointment type.