FFC Insurance and Protection Planning 3

Question 1

The 'face amount' (or face value) of a life insurance policy refers to:

Accepted Answer

The death benefit amount stated in the policy

Answer

The total premiums paid over the life of the policy

Answer

The cash surrender value at a given point in time

Answer

The annual cost of insurance charges

Question 2

A 'rider' added to an insurance policy is best described as:

Accepted Answer

An amendment that modifies or adds benefits to the base policy

Answer

A secondary beneficiary listed on the policy

Answer

The agent's commission disclosed in the policy documents

Answer

A mandatory government-required disclosure form

Question 3

Business overhead expense (BOE) insurance is designed to cover which costs during a business owner's disability?

Accepted Answer

Fixed business operating expenses such as rent, utilities, and staff salaries

Answer

The owner's personal mortgage and living expenses

Answer

Corporate income taxes owed during the disability period

Answer

Losses from reduced business revenues or profits

Question 4

The elimination period in a disability income insurance policy functions most similarly to:

Accepted Answer

A deductible expressed in time rather than dollars

Answer

A grace period for premium payments

Answer

The maximum benefit period the policy will pay

Answer

The exclusion for pre-existing conditions

Question 5

When evaluating a property insurance claim, 'actual cash value' (ACV) differs from 'replacement cost value' (RCV) in that ACV:

Accepted Answer

Deducts depreciation from the replacement cost of the damaged item

Answer

Pays more than replacement cost to account for inflation

Answer

Covers only the land value, not the structure

Answer

Requires the insured to pay no out-of-pocket costs

Question 6

Group insurance typically differs from individual insurance in which key way?

Accepted Answer

Group coverage is underwritten based on the group's characteristics with simplified or no individual medical underwriting

Answer

Group policies always provide higher death benefits than individual policies

Answer

Individual policies are always less expensive than group policies

Answer

Group plans cannot include life or disability coverage

Question 7

When conducting an insurance needs analysis for a client, a financial fitness coach should prioritize which step first?

Accepted Answer

Identifying the client's existing coverage, gaps, and financial obligations

Answer

Recommending the highest coverage amount available

Answer

Selecting the insurance company with the highest AM Best rating

Answer

Calculating the exact premium cost before discussing needs