Insurance (W!SE Practice Questions)

Debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should Debbie purchase?

Liability Insurance

Lucy has no insurance. The situation(s) should she consider insuring against first are:

Losses resulting from an illness, accident, or disability

When Jessie needs health care, she must first go to her primary care physician who coordinates her care and decides whether Jessie should see a specialist. Jessie pays $10 as the co-pay when she sees her primary care doctor. Jessie has which type of health insurance?

Managed Care Health Plan

Which of the following insurance covers vehicles?

Automobile Insurance

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

The policy only pays a death benefit

Richard's auto insurance policy expired on 5/15/2002. Richard was upset with his insurance agent and decided to change insurance companies. At 10:00 a.m. on 5/16/2002, as he drove to a different agent to buy a new policy, he had an accident. Who is liable for damage to his car and his personal injuries?

Richard

A person buys a homeowner's insurance policy with a $250 deductible, which means the person will:

Have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.

The purpose of Insurance is to:

Share risk with other policy holders in the company, protect your assets, and protect against potential losses

If you have a managed health care plan, it means that you:

Usually must first meet with your primary health care physician

John's job provided the main income for his family. He died unexpectedly and had no life insurance. The probable financial consequence for his wife and two children does not include:

a. The loss of John's income b. A reduction in the family's standard of living c. Death-related expenses to be paid d. An increase in income and expenses (CORRECT ANSWER!)

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 homeowner's 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

A calculated amount of money which includes the premiums paid as well as the interest on that money.

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

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

Death benefit or face value

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

Death benefit or face value

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

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

Generally, the higher the deductible on an insurance policy, the:

Lower the premium.

Gwen receives a bill from her auto insurance company, and she sends a check to the company to make sure her policy is not cancelled. The cost of her policy is called the:

Premium

When a self-employed person decides to purchase disability insurance it is generally to

Protect against the financial effects of not being able to work.

The only type of life insurance that does not develop a cash value is:

Term life insurance

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.

Ben's truck is crushed by a hit-and-run driver. Scott is hit by an uninsured driver. How will they receive payments?

Uninsured or no-fault motorist coverage

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

a. Baggage claim insurance b. Take his passport (CORRECT ANSWER!) c. Buy flight insurance d. Buy medical insurance that covers when he travels internationally

Which statement does NOT accurately describe a characteristic of cash value for whole life insurance?

a. Cash value grows gradually over time b. If the policy is cancelled, you may be entitled to some or all of the accrued cash value c. Policy that accumulates cash value is less expensive than a policy that does not accumulate cash value (CORRECT ANSWER!!) d. When an insured person dies, the beneficiary will receive the death benefit but the insurance company keeps the cash value