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AAdmin
Jan 15'24

Exercise

A self-employed small business owner purchased an insurance contract that will pay a benefit equal to [math]70 \%[/math] of salary in the event that the owner becomes sick and cannot work. The contract will cease at retirement age.

Determine which of the following contracts provides these benefits.

  • Term life insurance
  • Disability income insurance
  • Long-term care insurance
  • Single premium immediate annuity
  • Critical illness insurance
AAdmin
Jan 15'24

Answer: B

Key is that benefit is contingent upon being sick, but not related to long-term care. Replacing salary and benefits tied to being unable to work also fit best with [math]B[/math].

Copyright 2024 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Copyright 2024. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

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