C.25 Insurance needs analysis Flashcards
(20 cards)
What is the first step in the insurance needs analysis process?
A) Assessing the client’s financial situation
B) Determining the client’s insurance needs
C) Identifying the client’s risk exposures
D) Evaluating the client’s existing insurance coverage
Identifying the client’s risk exposures. The first step in the insurance needs analysis process is to identify the client’s risk exposures.
What type of insurance would be most appropriate for a client with a high risk of premature death?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Homeowner’s insurance
Life insurance. Life insurance is designed to provide financial protection in the event of premature death.
What type of insurance would be most appropriate for a client with a high risk of a catastrophic illness?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Homeowner’s insurance
Long-term care insurance. Long-term care insurance is designed to provide financial protection in the event of a catastrophic illness.
What is the purpose of a life insurance needs analysis?
A) To determine how much life insurance coverage a client needs
B) To assess a client’s risk exposures
C) To evaluate a client’s existing life insurance coverage
D) To identify a client’s long-term care needs
To determine how much life insurance coverage a client needs. A life insurance needs analysis is designed to determine how much life insurance coverage a client needs.
What type of insurance would be most appropriate for a client with a high risk of becoming disabled and unable to work?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Homeowner’s insurance
Disability insurance. Disability insurance is designed to provide financial protection in the event of disability and inability to work.
During the insurance needs analysis process, what factors should be considered when determining the appropriate amount of life insurance coverage?
A) Age, income, and number of dependents
B) Education level, occupation, and marital status
C) Home value, location, and size
D) Debt load, credit score, and investment portfolio
Age, income, and number of dependents. When determining the appropriate amount of life insurance coverage, factors such as age, income, and number of dependents should be considered.
What type of insurance would be most appropriate for a client who owns a home and wants to protect it from damage or loss?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Homeowner’s insurance
Homeowner’s insurance. Homeowner’s insurance is designed to provide protection for a client’s home and personal property.
During the insurance needs analysis process, what factors should be considered when determining the appropriate amount of disability insurance coverage?
A) Age, income, and number of dependents
B) Education level, occupation, and marital status
C) Home value, location, and size
D) Debt load, credit score, and investment portfolio
Education level, occupation, and marital status. When determining the appropriate amount of disability insurance coverage, factors such as education level, occupation, and marital status should be considered.
What type of insurance would be most appropriate for a client who is concerned about the cost of long-term care in the future?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Homeowner’s insurance
Long-term care insurance. Long-term care insurance is designed to provide financial protection in the event of a need for long-term care services
During the long-term insurance needs analysis process, what factors should be considered when determining the appropriate amount of long-term care insurance coverage?
A) Age, income, and number of dependents
B) Education level, occupation, and marital status
C) Home value, location, and size
D) Health history, family medical history, and lifestyle factors
Health history, family medical history, and lifestyle factors. When determining the appropriate amount of long-term care insurance coverage, factors such as health history, family medical history, and lifestyle factors should be considered
What is the purpose of a disability insurance needs analysis?
A) To determine how much disability insurance coverage a client needs
B) To assess a client’s risk exposures
C) To evaluate a client’s existing disability insurance coverage
D) To identify a client’s long-term care needs
To determine how much disability insurance coverage a client needs. A disability insurance needs analysis is designed to determine how much disability insurance coverage a client needs.
What type of insurance would be most appropriate for a client who is concerned about the financial impact of a critical illness?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Critical illness insurance
Critical illness insurance. Critical illness insurance is designed to provide a lump sum benefit to help cover the expenses associated with a critical illness.
During the insurance needs analysis process, what factors should be considered when determining the appropriate amount of critical illness insurance coverage?
A) Age, income, and number of dependents
B) Education level, occupation, and marital status
C) Home value, location, and size
D) Health history, family medical history, and lifestyle factors
Health history, family medical history, and lifestyle factors. When determining the appropriate amount of critical illness insurance coverage, factors such as health history, family medical history, and lifestyle factors should be considered.
What type of insurance would be most appropriate for a client who is concerned about the financial impact of a sudden death?
A) Long-term care insurance
B) Disability insurance
C) Life insurance
D) Critical illness insurance
Life insurance. Life insurance is designed to provide financial protection in the event of premature death.
During the insurance needs analysis process, what factors should be considered when determining the appropriate amount of homeowner’s insurance coverage?
A) Age, income, and number of dependents
B) Education level, occupation, and marital status
C) Home value, location, and size
D) Debt load, credit score, and investment portfolio
Home value, location, and size. When determining the appropriate amount of homeowner’s insurance coverage, factors such as home value, location, and size should be considered.
Case Study: Risk Management and Insurance Planning for the Anderson Family
Background:
The Anderson family consists of John (40), his wife Jane (37), and their two children, Luke (10) and Maya (7). John is an architect earning $90,000 annually, and Jane is a freelance writer, bringing in about $30,000 annually. Their combined household assets amount to $450,000, including their home, investments, and retirement savings. They have a mortgage of $200,000, which has 20 years remaining.
Insurance Profile:
- John has a term life insurance policy with a death benefit of $200,000.
- Jane doesn’t have life insurance.
- They both have health insurance through John’s employer.
- John has disability insurance covering 60% of his income.
- Their homeowners’ insurance policy covers the replacement value of their home but does not include any additional coverage for natural disasters.
Question:
Which of the following insurance needs is the most immediate concern for the Anderson family?
A) Increasing homeowners’ insurance to cover natural disasters
B) Getting life insurance for Jane
C) Getting a comprehensive auto insurance policy
D) Increasing John’s life insurance coverage
Getting life insurance for Jane.
Explanation: Jane contributes significantly to the household income, and in her absence, the family would face financial hardships. Ensuring she has adequate life insurance coverage is crucial.
Case Study: Risk Management and Insurance Planning for the Anderson Family
Background:
The Anderson family consists of John (40), his wife Jane (37), and their two children, Luke (10) and Maya (7). John is an architect earning $90,000 annually, and Jane is a freelance writer, bringing in about $30,000 annually. Their combined household assets amount to $450,000, including their home, investments, and retirement savings. They have a mortgage of $200,000, which has 20 years remaining.
Insurance Profile:
- John has a term life insurance policy with a death benefit of $200,000.
- Jane doesn’t have life insurance.
- They both have health insurance through John’s employer.
- John has disability insurance covering 60% of his income.
- Their homeowners’ insurance policy covers the replacement value of their home but does not include any additional coverage for natural disasters.
Question:
If John were to become disabled and could not work, what approximate amount would his disability insurance cover per year?
A) $45,000
B) $54,000
C) $36,000
D $60,000
$54,000.
Explanation: John’s disability insurance covers 60% of his income. 60% of $90,000 is $54,000.
Case Study: Risk Management and Insurance Planning for the Anderson Family
Background:
The Anderson family consists of John (40), his wife Jane (37), and their two children, Luke (10) and Maya (7). John is an architect earning $90,000 annually, and Jane is a freelance writer, bringing in about $30,000 annually. Their combined household assets amount to $450,000, including their home, investments, and retirement savings. They have a mortgage of $200,000, which has 20 years remaining.
Insurance Profile:
- John has a term life insurance policy with a death benefit of $200,000.
- Jane doesn’t have life insurance.
- They both have health insurance through John’s employer.
- John has disability insurance covering 60% of his income.
- Their homeowners’ insurance policy covers the replacement value of their home but does not include any additional coverage for natural disasters.
Question:
Given their current financial obligations, how much additional life insurance coverage should John consider to adequately cover the family’s needs?
A) $100,000
B) $200,000
C) $450,000
D) $650,000
$650,000.
Explanation: Ideally, John should have enough life insurance to cover the mortgage ($200,000), replace his income for several years, and provide for other miscellaneous expenses. $650,000 minus his current $200,000 policy leaves $450,000, which would provide for approximately 5 years of his salary and additional unforeseen expenses.
Case Study: Risk Management and Insurance Planning for the Anderson Family
Background:
The Anderson family consists of John (40), his wife Jane (37), and their two children, Luke (10) and Maya (7). John is an architect earning $90,000 annually, and Jane is a freelance writer, bringing in about $30,000 annually. Their combined household assets amount to $450,000, including their home, investments, and retirement savings. They have a mortgage of $200,000, which has 20 years remaining.
Insurance Profile:
- John has a term life insurance policy with a death benefit of $200,000.
- Jane doesn’t have life insurance.
- They both have health insurance through John’s employer.
- John has disability insurance covering 60% of his income.
- Their homeowners’ insurance policy covers the replacement value of their home but does not include any additional coverage for natural disasters.
Question:
Assuming the Anderson family lives in an area with a high risk of natural disasters, what change should they consider for their homeowners’ insurance?
A) Decrease the deductible for quicker claims.
B) Add coverage for natural disasters.
C) Switch to a cheaper insurer to save money.
D) Drop the homeowners’ insurance since the risk is too high.
Add coverage for natural disasters
Explanation: Living in a high-risk area means they should have additional coverage for potential natural disasters. Dropping coverage or choosing a cheaper insurer without considering coverage could leave them vulnerable.
Case Study: Risk Management and Insurance Planning for the Anderson Family
Background:
The Anderson family consists of John (40), his wife Jane (37), and their two children, Luke (10) and Maya (7). John is an architect earning $90,000 annually, and Jane is a freelance writer, bringing in about $30,000 annually. Their combined household assets amount to $450,000, including their home, investments, and retirement savings. They have a mortgage of $200,000, which has 20 years remaining.
Insurance Profile:
- John has a term life insurance policy with a death benefit of $200,000.
- Jane doesn’t have life insurance.
- They both have health insurance through John’s employer.
- John has disability insurance covering 60% of his income.
- Their homeowners’ insurance policy covers the replacement value of their home but does not include any additional coverage for natural disasters.
Question:
If Jane were to consider getting a term life insurance policy with a similar death benefit as John’s, which factor will most likely result in her premium being different from John’s?
A) Jane’s occupation as a freelance writer.
B) The age difference between Jane and John.
C) The number of children they have.
D) Their combined household assets.
The age difference between Jane and John
Explanation: Age is a significant factor in determining life insurance premiums. Since Jane is three years younger than John, it could impact her premium, even if other factors remained constant.
