BUS 410 CH15 QUESTIONS WELL ANSWERED LATEST UPDATE 2026
What is the primary function of an insurance company? - Answers To compensate policyholders if a
prespecified event occurs in exchange for premiums.
What is the role of an insurance underwriter? - Answers To assess the risk of an applicant for
coverage.
What is the role of an insurance broker? - Answers To sell insurance contracts.
What are the two broad classifications of insurance? - Answers Life insurance and property-casualty
insurance.
Why have many life insurance companies undergone mergers in recent years? - Answers To take
advantage of economies of scale, scope, and other synergies.
How do life insurers diversify away customer-specific risk? - Answers By pooling the risks of many
individuals.
What is an annuity contract? - Answers A savings contract that involves the liquidation of funds saved
over a period of time.
What is the adverse selection problem in insurance? - Answers The tendency for those most in need
of coverage to be the ones most likely to apply for insurance.
What is the primary role of actuaries in life insurance? - Answers To reduce the risks of underwriting
and selling insurance by analyzing mortality, morbidity, and other contingencies.
What are the four basic classes of life insurance? - Answers Ordinary life, group life, credit life, and
other activities.
What is term life insurance? - Answers A policy with no savings element that pays the beneficiary
only if the insured dies during the coverage period.
How does whole life insurance differ from term life? - Answers Whole life protects the individual over
an entire lifetime and allows borrowing against cash value.
What is endowment life insurance? - Answers A policy that pays the face value to the beneficiary
upon death, or to the policyholder if they are still alive at expiration.
What defines variable life insurance? - Answers Premiums are invested in mutual funds, and the
death benefit varies based on investment returns.
What is universal life insurance? - Answers A policy with no expiration where premiums can vary and
are invested in mutual funds.
What is group life insurance? - Answers A single policy covering a large number of insured persons,
typically issued to corporate employers.
What is the difference between contributory and noncontributory group life insurance? - Answers
Contributory requires both employer and employee to pay; noncontributory is paid entirely by the
employer.
What is credit life insurance? - Answers Insurance that protects lenders against a borrower's death
before a debt is fully repaid.
What is the primary purpose of life insurance policies? - Answers To provide protection against
untimely death, illness, and retirement.
What is the purpose of property-casualty insurance? - Answers To protect against personal injury and
liability due to accidents, theft, fire, and other catastrophes.
What do actuaries use to produce life insurance and annuity policies? - Answers Mortality analysis,
life tables, and time value of money concepts.
What is the most common type of life insurance by percentage of policies in force? - Answers
Ordinary life (53.6%).
What happens to the premium if the probability of a major pandemic increases? - Answers Insurers
typically increase premiums for all insured groups.
How are annuities related to life insurance principles? - Answers Annuities represent the reverse of
life insurance principles.
What is the primary difference between life insurance and annuities? - Answers Life insurance builds
a fund for a lump sum payout, while annuities liquidate a fund over a long period.
Why are annuities popular for retirement savings compared to IRAs? - Answers Annual contributions
are not capped and are not affected by the policyholder's income level.
What percentage of private pension plan assets were managed by life insurers in 2018? - Answers 38
percent
What is the primary function of an insurance company? - Answers To compensate policyholders if a
prespecified event occurs in exchange for premiums.
What is the role of an insurance underwriter? - Answers To assess the risk of an applicant for
coverage.
What is the role of an insurance broker? - Answers To sell insurance contracts.
What are the two broad classifications of insurance? - Answers Life insurance and property-casualty
insurance.
Why have many life insurance companies undergone mergers in recent years? - Answers To take
advantage of economies of scale, scope, and other synergies.
How do life insurers diversify away customer-specific risk? - Answers By pooling the risks of many
individuals.
What is an annuity contract? - Answers A savings contract that involves the liquidation of funds saved
over a period of time.
What is the adverse selection problem in insurance? - Answers The tendency for those most in need
of coverage to be the ones most likely to apply for insurance.
What is the primary role of actuaries in life insurance? - Answers To reduce the risks of underwriting
and selling insurance by analyzing mortality, morbidity, and other contingencies.
What are the four basic classes of life insurance? - Answers Ordinary life, group life, credit life, and
other activities.
What is term life insurance? - Answers A policy with no savings element that pays the beneficiary
only if the insured dies during the coverage period.
How does whole life insurance differ from term life? - Answers Whole life protects the individual over
an entire lifetime and allows borrowing against cash value.
What is endowment life insurance? - Answers A policy that pays the face value to the beneficiary
upon death, or to the policyholder if they are still alive at expiration.
What defines variable life insurance? - Answers Premiums are invested in mutual funds, and the
death benefit varies based on investment returns.
What is universal life insurance? - Answers A policy with no expiration where premiums can vary and
are invested in mutual funds.
What is group life insurance? - Answers A single policy covering a large number of insured persons,
typically issued to corporate employers.
What is the difference between contributory and noncontributory group life insurance? - Answers
Contributory requires both employer and employee to pay; noncontributory is paid entirely by the
employer.
What is credit life insurance? - Answers Insurance that protects lenders against a borrower's death
before a debt is fully repaid.
What is the primary purpose of life insurance policies? - Answers To provide protection against
untimely death, illness, and retirement.
What is the purpose of property-casualty insurance? - Answers To protect against personal injury and
liability due to accidents, theft, fire, and other catastrophes.
What do actuaries use to produce life insurance and annuity policies? - Answers Mortality analysis,
life tables, and time value of money concepts.
What is the most common type of life insurance by percentage of policies in force? - Answers
Ordinary life (53.6%).
What happens to the premium if the probability of a major pandemic increases? - Answers Insurers
typically increase premiums for all insured groups.
How are annuities related to life insurance principles? - Answers Annuities represent the reverse of
life insurance principles.
What is the primary difference between life insurance and annuities? - Answers Life insurance builds
a fund for a lump sum payout, while annuities liquidate a fund over a long period.
Why are annuities popular for retirement savings compared to IRAs? - Answers Annual contributions
are not capped and are not affected by the policyholder's income level.
What percentage of private pension plan assets were managed by life insurers in 2018? - Answers 38
percent
