Chapter 8, ch 9, ch 10
A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:
31 days
Which of the following is true of long-term care insurance?
Many policies offer inflation protection riders for an additional premium.
Which of the following is a public assistance program that provides health insurance benefits only to those who are unable to pay for health care?
Medicaid
A ___________ is a hybrid form of health maintenance organization (HMO) that allows members to go outside of the HMO network for care.
point-of-service (POS) plan
To purchase a personal liability umbrella policy, the insured party must already have __________.
relatively high liability limits on their homeowner's and auto coverage
Avoiding alcoholic beverages while driving is an example of loss prevention.
true
The primary purpose of life insurance is to protect family members of the insured from financial loss in the event of his or her untimely death.
true
Michael's estimated current monthly take-home pay is $4,500. His total existing monthly benefits is $2,950. Michael's estimated monthly disability benefits is _____.
$1,550
A $100,000/$300,000 bodily injury liability automobile policy could pay up to a total of __________ to all injured victims in one accident.
$300,000
Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability?
Guaranteed purchase option
Which of the following is a basic, seldom-used homeowner's policy with very narrow coverage?
HO-1
Which of the following statements is true of the health reimbursement account (HRA)?
The amount of unused money in the health reimbursement account can be rolled over annually.
Which of the following is true of the multiple-of-earnings method?
The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number.
Which of the following is true of the workers' compensation insurance?
Workers' compensation insurance compensates workers who are injured on the job or become ill through work-related causes.
An exclusive provider organization (EPO) is _____.
a managed care plan that reimburses members only when affiliated providers are used
Group life insurance is:
an insurance that provides a master policy for a group.
Insurance is a tool that can reduce one's _____ risk.
economic
Some employers providing health insurance as an employee benefit offer only one plan and pay _____.
either all or part of the health care insurance premiums
A captive agent typically represents two to ten different insurance companies.
false
Advances in medical technology, drug prescriptions, and treatments have substantially reduced the cost of health care in recent decades.
false
Earthquakes are covered under most homeowner's insurance policies.
false
Families faced with the loss of a principal wage earner receive Social Security benefits _____.
from the government that are intended to provide basic, minimum support
Employers often provide _____ life insurance as a fringe benefit for their employees.
group
One drawback of long-term-care insurance is its:
high annual premiums
The average age of the American population ___________.
is increasing
It pays to comparison shop for insurance policies because of the __________.
large variations in premiums and services
A personal liability umbrella policy is more likely to be opted for by __________.
people with high incomes and high net worth
The community rating approach to health insurance premium pricing _____.
prohibits insurance companies from varying rates based on health status or claims history
An insured individual's right to continue a health insurance policy if he or she chooses is known as:
renewability.
A(n) _____ is a common provision in many term policies.
renewable clause
While performing needs analysis, when determining the available resources to offset the economic needs, you would generally ignore:
the educational qualification of the children.
The ACA's provisions relating to long-term care include the Community Living Assistance Services and Support Program (CLASS), which will be administered by ___________.
the government
When purchasing a long-term-care policy, ___________.
the guaranteed renewability provision is recommended
An insured does not get the right to arbitration when:
the insurance company denies responsibility for the loss
_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.
the needs analysis method
At the scene of an accident, the police are only responsible for assessing __________.
the probability of a law violation
In the pure community rating approach to health insurance premium pricing, all policyholders in an area pay:
the same premium without regard to their personal health, age, or gender.
Employees should consider risk assumption for certain health risks because:
they would rather pay small amounts from savings than higher premiums to cover them.
A house with a replacement value of $110,000 is currently insured for $90,000. The house is damaged in a windstorm, causing a loss of $15,000. The insurance company will pay an amount equal to $15,000 less the deductible.
true
The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.
true
Underwriters use life expectancy figures to look at overall longevity for various age groups and also consider specific factors related to an applicant's health, habits, and experiences.
true
You would have a better chance of choosing your own doctor with a preferred provider organizations (PPO) plan than with a health maintenance organizations (HMO) plan.
true
In order to qualify for disability insurance under Social Security, a person must be:
unable to carry out the duties of any job
It can be difficult to evaluate the true cost of a _____ at the time of purchase.
universal life insurance
Dependent children ___________ will usually be covered by your health insurance policy.
up to a stated maximum age
The policy owner assumes the investment risk with a ___________ insurance policy.
vaiable life
The death benefit of a(n) _____ life insurance policy may go down because of poor investment returns.
variable
Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, is the primary beneficiary, and their children, Mimi (age 24) and Ann (age 30), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distributed?
$200,000 to Jack
Which of the following homeowners' policies provides coverage for damage caused by electrical current?
HO-2
Donna, who is single and 30 years old, received several speeding tickets recently and was shocked by the effect they had on her auto insurance. Donna drives a 2002 Pontiac Firebird. She is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to help Donna reduce the price of her auto insurance?
Raising her deductible from $250 to $1,000
When trying to determine your disability income needs, you should consider your available disability benefits from employers, income needs, and:
Social Security benefits.
Funds for Medicare benefits come from:
Social Security taxes paid by covered workers and their employers
You can learn about the financial strength of an insurance company by checking ___________ rating system.
Standard & Poor's
Which of the following statements is true of the Affordable Health Care Act (ACA)?
The ACA eliminates lifetime limits on total health care insurance payments by insurers.
Group life insurance is most likely to be for ___________.
a term
The principle of indemnity will prevent:
an insured from collecting more than what he or she has lost.
A supplementary medical insurance (SMI) provides health care protection beyond the basic hospital coverage for:
anyone age 65 or over who pays premiums on a voluntary basis
A personal liability umbrella policy typically includes:
coverage for auto-related liability losses in excess of the limits purchased in the automobile insurance.
All group insurance plans extend health insurance benefits to retirees.
false
Blue Cross provides hospital coverage and Blue Shield provides prescription pharmacy coverage.
false
Disability insurance is available only when someone is completely incapable of returning to work during his or her lifetime.
false
Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.
false
If an insured has a high-risk hobby, then he or she should expect to pay less for life insurance.
false
Increasing the amount of the deductible is the only way to bring down the cost of homeowner's insurance.
false
Insurance agents always disclose their commissions in an insurance policy.
false
Medicare and Medicaid are administered by hospitals and physicians.
false
Uninsured motorists protection usually provides protection to the insured's car if a hit-and-run incident occurs.
false
The primary purpose of life insurance is to provide:
financial security for dependents in the event of death.
_____ can be both an advantage and a disadvantage of universal life insurance.
flexible premiums
A(n) __________ agent represents multiple insurance companies.
independent
A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed _____.
industrial life insurance
Medicare is a government-sponsored health care plan composed of Part A and Part B. Part A provides ___________.
inpatient hospital services
A(n) _____ policy is a contract between an individual and a company under which the company agrees to reimburse the individual for losses suffered by him or her according to specified terms.
insurance
In order to predict the number of losses that will occur in a given time accurately, insurance companies must study a ___________ numbers of cases.
large
You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance.
limited payment whole life
The insurance designed to help with nursing home or in-home care due to chronic illness is called:
long-term care.
The probability of a loss occurring can be reduced by_____.
loss prevention
___________ is an activity that reduces the chance that a loss will occur.
loss prevention
The settlement option chosen by most policyholders is:
lump sum
If you are laid off, your group health insurance ___________.
must be continued if you pay the premium
The _____ method is the most accurate method of determining the amount of life insurance coverage needed for an individual.
needs analysis
The most accurate way to determine how much life insurance you need is to use the ___________ method.
needs analysis
Workers' compensation insurance will make compensation payments to an injured worker _____.
only if he has been hurt on the job
Term life insurance is characterized by _____.
premium amounts related to age of the insureds
The personal property floater:
provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy
___________ is the choice to accept and bear the risk of loss.
risk assumption
_____ involves abstaining from any activity that will affect an individual financially.
risk avoidance
The purchase of insurance is a common form of _____ by the insured.
risk transfer
A personal liability umbrella policy is designed to __________.
supplement homeowner's insurance coverage
The insurance portion of a universal life policy is most analogous to:
term insurance
Which of the following types of insurance policies provides temporary coverage for a set period?
term life insurance policy
A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary, which means that _____.
the cash benefits from your life insurance policy cannot be claimed by creditors
Replacement-cost coverage is the reimbursement of:
the cost of repairing or replacing damaged structures without deducting physical depreciation.
Long-term care is a term used to describe _____.
the delivery of medical care to persons with chronic medical conditions in a nursing home
A preferred provider organization has characteristics of both an individual practice association (IPA) and an indemnity plan.
true
Generally, group insurance plans are more reasonably priced than individual policies.
true
Health Maintenance Organizations (HMOs) provide health care to participants without requiring them to file insurance claims.
true
Life insurance proceeds paid to your heirs are not usually subject to state or federal income taxes.
true
Millions of Americans are not covered by health insurance.
true
Never discuss liability at the scene of an accident, or with anyone other than the police and the insurance company.
true
Risk avoidance is attractive when the cost of avoidance is less than the cost of handling it some other way.
true
The need for life insurance increases with children.
true
The premiums for homeowners' insurance policies are based on the size of the deductible, any policy limits, and the standard coverage.
true
Sales commissions and marketing expenses can increase the costs of a fully loaded _____ policy.
whole life insurance
Disability income insurance will provide income to a disabled or ill person ___________.
with a waiting period before income is received
A liability suit could result against you if:
your dog bites your neighbor
Which of the following homeowners' policies provides coverage for the damage caused by the accidental discharge of water or steam?
HO-2
Which of the following homeowners' policies is best suited to a renter of an apartment?
HO-4
Universal life insurance is:
a combined investment plan and insurance policy.
Auto insurance is needed primarily:
as protection against potential liability claims
The most preferred technique for determining how much life insurance coverage is needed for an individual is:
assessing the family's total economic needs and subtracting the financial resources available to meet those needs.
Comprehensive automobile coverage refers to:
coverage for damage to an insured automobile from perils (with a few exceptions) other than collision
Employers set up a salary reduction agreement with the employees if:
employees need additional insurance benefits.
A personal property floater and a personal liability umbrella policy offer similar coverage.
false
Large employers are less likely to offer health insurance to their employees than small employers.
false
Premiums for workers' compensation insurance are paid by the employees.
false
Risk avoidance involves asking an insurance company to take over the risk for a small payment (the premium).
false
The life insurance needs of beneficiaries are secondary since most proceeds are paid to policyholders.
false
___________ insurance is a type of insurance that is issued in policies with small face amounts, often $1,000 or less.
industrial life
Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80 percent of the amount that it would cost to build them today, __________ can cause the actual amount of coverage to fall below 80 percent.
inflation
A good health insurance plan embodies more than financing medical expenses, lost income, replacement services; it incorporates ___________.
means of risk reduction such as risk avoidance
A life insurance policy can be structured so that death benefits are paid directly to a(n) ___________, which means that creditors cannot claim the cash benefits from the life insurance policy.
named beneficiary
A coordination of benefits provision in a health care policy ___________ by collecting benefits in multiple payments for health care.
prohibits collecting more than 100 percent of covered charges
The purchasing power of income from a long-term disability policy is protected by _____.
the Cost-of-living adjustment (COLA) provision
The Affordable Care Act (ACA) requires insurance companies to adhere to:
the adjusted community rating approach for individuals and small businesses.
An individual's need for additional life insurance can be determined by looking at the difference between his or her family's available financial resources after his or her death and his or her family's total economic needs.
true
Living a healthy lifestyle is an example of loss prevention and control.
true
Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What is the amount of insurance, as per the needs analysis method, that Jonathan should purchase if he has current financial resources worth $1,000,000?
$1,000,000
Patrick's monthly take-home pay is $5,000. His net worth is $125,000. He estimated that he would receive Social Security benefits worth $1,000 and company disability benefits $2,000 if he becomes disabled. The additional disability benefits that he needs to arrange for equals _____.
$2,000
A homeowner's policy does not provide protection for:
the personal property of tenants
Insurance companies use actuarial data to measure:
the risk of loss for a given population.
The maximum coverage under most dental policies is often in the range of _____ per patient.
$1,000 to $2,500
The Medicare co-insurance payment is typically:
20 percent
It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years.
25
___________ is a health care plan that emphasizes cost control and preventive treatment.
A managed care plan
Which of the following changes would tend to increase the premium on a disability policy?
A shorter elimination period
_____ and _____ are both relatively expensive types of decreasing term life insurance.
Credit life; mortgage life
Which of the following leads to the payment of a higher insurance premium by the potential insured?
Obesity of the potential insured
Which of the following is true of a good insurance agent?
The agent is recommended by professionals like bankers and attorneys.
During the past few decades, the percentage of our income spent on health care:
has increased due to an aging U.S. population.
A life insurance agent who takes her profession seriously is likely to have earned a professional certification like the ___________.
chartered life underwriter
An insurance company assigns more complex loss cases to a __________.
claims adjuster
Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy, he will receive the cash value. His plan is a _____ policy.
continuous whole life