Business and Personal Law

Chapter 21: Insurance and Estate Planning

Self Check Answers

Section 21.1

1. to protect individuals and businesses against losses by spreading the risks of loss over a large number of people
2. Policyholder buys insurance; beneficiary named in policy receives benefits in the event of a loss.
3. Straight life: requires payment of premiums throughout the insured's life and pays its face value to the beneficiary. Term: issued for a particular period, usually five or ten years.

Section 21.2

1. any person 18 years of age or older with both testamentary capacity and intent
2. by burning, tearing, canceling, or obliterating the document with the intent of revoking it; by executing a new will; and by changing marital status
3. a person who holds title to the property for another's benefit and should exercise a high degree of care in investing the trust funds