Insurance (#1)

Just incase

Question 1 : A person buys a flat screen, plasma, theater-like television. The person has homeowner?s insurance. Why would it be appropriate to add a personal property floater to that insurance? Correct Answer : D: To cover the cost of replacement should the television get damaged or stolen. Reason : An extremely expensive item such as furs or jewelry or, in this case, the theater-like television, would usually not be covered in a standard insurance policy. As a result, policy holders often opt to attach a rider or ?floater? to the policy to cover replacement or repair of these items. The policy holder also must pay an additional premium for the ?floater? coverage. Question 2 : For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender, the person will receive Correct Answer : C: a calculated amount of money which includes the premiums paid as well as the interest on that money. Reason : The cash value of a whole life insurance policy is based on premiums paid plus some of the interest earned. Question 3 : A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent? Correct Answer : A: "I think I need a personal property floater." Reason : A personal floater is additional property insurance, which is available within a homeowner?s policy, to cover damage or loss of a specific item of value. Your Answer : D: "I realize that if this jewelry is stolen it will be considered vicarious liability." Question 4 : You have a $2,000 loss. Your insurance company pays you $1,500 on the claim for the loss. The $500 the insurance did not pay is a result of your policy having a: Correct Answer : B: Deductible Reason : Most homeowner's insurance policies include a deductible. The policy owner is responsible for the deductible amount before the insurance company will pay any portion of the claim. Thus, the policyholder must pay for all losses equal to or less than the deductible. Raising the deductible on a policy causes the premium to decrease, sometimes significantly. Question 5 : Mr. Akon's wife died. The money he received as the beneficiary on her life insurance is called the: Correct Answer : B: Death benefit or face value Reason : The face value, face amount, or death benefit is the amount of money that a life insurance policy will pay to the beneficiary on the death of the insured person. Any outstanding policy loans will reduce the death benefit by an amount equal to the unpaid loan balance. Your Answer : D: Premium or annuity value Question 6 : Sally took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the: Correct Answer : C: Death benefit or face value Reason : The face value, face amount, or death benefit is the amount of money that a life insurance policy will pay to the beneficiary on the death of the insured person. Any outstanding policy loans will reduce the death benefit by an amount equal to the unpaid loan balance. Your Answer : D: Annuity value Question 7 : Neil will be traveling by air in Southeast Asia for a six-week vacation. Which step will not provide protection during the trip? Correct Answer : B: Take his passport Reason : Many medical insurance policies do not cover or severely limit medical care received outside the U.S. when traveling to certain areas of the world. Luggage is more likely to be lost during international travel with multiple stops, and airlines will reimburse travelers only up to a certain dollar amount for lost luggage. Most international airline tickets are expensive, and flight insurance reimburses the traveler if he/she cannot take the flight due to illness or accident. Your Answer : C: Buy flight insurance Question 8 : Sally's health insurance policy requires her to pay the first $500 of medical costs each year before the company will pay any of her medical bills. This policy provision is the: Correct Answer : C: Annual deductible Reason : The deductible is the dollar amount of medical expenses that the insured must pay each year before the insurance company pays anything. Deductibles are used in medical, auto, and property insurance. A basic insurance principle is the higher the deductible, the lower the premium. Question 9 : Why is term life insurance usually the least expensive type of life insurance? Correct Answer : A: The policy only pays a death benefit Reason : Term life insurance is the least expensive type of life insurance because it is only a death benefit and insures the individual for a limited number of years... There is no cash value accumulation. The death benefit is paid only if the insured dies during the term of coverage. Your Answer : D: The policy is available to all consumers Question 10 : Insurance is frequently described as a method of "sharing the risk" because the: Correct Answer : B: Insured shares the risk of loss with all the other policy holders Reason : Part of every policyholder's premium is put into a "pool" from which the few policyholders who have claims are paid. Policyholders know that some of them will experience losses and make claims; they just don't know who it will be. By sharing the risk, each policyholder can cover large risks at a low premium cost. Your Answer : C: Insured can share the risk by spreading the cost over a number of years

A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent?

"I think I need a personal property floater." A personal floater is additional property insurance, which is available within a homeowners policy, to cover damage or loss of a specific item of value.

For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender, the person will receive

A calculated amount of money which includes the premiums paid as well as the interest on that money. The cash value of a whole life insurance policy is based on premiums paid plus some of the interest earned.

Sally's health insurance policy requires her to pay the first $500 of medical costs each year before the company will pay any of her medical bills. This policy provision is the:

Annual deductible The deductible is the dollar amount of medical expenses that the insured must pay each year before the insurance company pays anything. Deductibles are used in medical, auto, and property insurance. A basic insurance principle is the higher the deductible, the lower the premium.

Mr. Akon's wife died. The money he received as the beneficiary on her life insurance is called the:

Death benefit or face value. The face value, face amount, or death benefit is the amount of money that a life insurance policy will pay to the beneficiary on the death of the insured person. Any outstanding policy loans will reduce the death benefit by an amount equal to the unpaid loan balance.

Sally took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the:

Death benefit or face value. The face value, face amount, or death benefit is the amount of money that a life insurance policy will pay to the beneficiary on the death of the insured person. Any outstanding policy loans will reduce the death benefit by an amount equal to the unpaid loan balance.

You have a $2,000 loss. Your insurance company pays you $1,500 on the claim for the loss. The $500 the insurance did not pay is a result of your policy having a:

Deductible. Most homeowner's insurance policies include a deductible. The policy owner is responsible for the deductible amount before the insurance company will pay any portion of the claim. Thus, the policyholder must pay for all losses equal to or less than the deductible. Raising the deductible on a policy causes the premium to decrease, sometimes significantly.

Insurance is frequently described as a method of "sharing the risk" because the:

Insured shares the risk of loss with all the other policy holders. Part of every policyholder's premium is put into a "pool" from which the few policyholders who have claims are paid. Policyholders know that some of them will experience losses and make claims; they just don't know who it will be. By sharing the risk, each policyholder can cover large risks at a low premium cost.

Neil will be traveling by air in Southeast Asia for a six-week vacation. Which step will not provide protection during the trip?

Take his passport Many medical insurance policies do not cover or severely limit medical care received outside the U.S. when traveling to certain areas of the world. Luggage is more likely to be lost during international travel with multiple stops, and airlines will reimburse travelers only up to a certain dollar amount for lost luggage. Most international airline tickets are expensive, and flight insurance reimburses the traveler if he/she cannot take the flight due to illness or accident.

Why is term life insurance usually the least expensive type of life insurance?

The policy only pays a death benefit Term life insurance is the least expensive type of life insurance because it is only a death benefit and insures the individual for a limited number of years... There is no cash value accumulation. The death benefit is paid only if the insured dies during the term of coverage.

A person buys a flat screen, plasma, theater-like television. The person has homeowner?s insurance. Why would it be appropriate to add a personal property floater to that insurance?

To cover the cost of replacement should the television get damaged or stolen.