Metheny, FIN 322, Fall 2018

Homeowners are eligible for reimbursement on a full replacement-cost basis only if they keep their homes insured for at least __________ of the amount that it would cost to build them today.

80%

A personal property floater and a personal liability umbrella policy offer similar coverage.

False

All group insurance plans extend health insurance benefits to retirees.

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

Increasing the amount of the deductible is the only way to bring down the cost of homeowner's insurance.

False

Under the adjusted (modified) community rating approach to health insurance premium pricing, all policyholders in an area pay the same premium without regard to their personal health, age, gender, or other factors.

False

Uninsured motorists protection usually provides protection to the insured's car if a hit-and-run incident occurs.

False

An elimination period is the number of days that must pass before disability policies pay the benefits.

True

Millions of Americans are not covered by health insurance.

True

Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of the principal wage earner.

True

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

True

The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities.

True

The life insurance needs of beneficiaries are secondary since most proceeds are paid to policyholders.

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

Which of the following is true of insurance underwriting?

Underwriters design rate classification schedules so that people pay premiums that reflect their chance of loss.

The policy owner assumes the investment risk with a ___________ insurance policy.

Variable life

Sales commissions and marketing expenses can increase the costs of a fully loaded _____ policy.

Whole Life Insurance

The best way to buy automobile insurance is through __________.

an insurance agent

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.

Negligence occurs when someone:

fails to act in a reasonable manner

Medicare is a government-sponsored health care plan composed of Part A and Part B. Part B covers ___________.

imaging, laboratory tests, and prosthetic devices

If you are laid off, your group health insurance ___________.

must be continued if you pay the premiums

To purchase a personal liability umbrella policy, the insured party must already have __________.

relatively high liability limits on their homeowner's and auto coverage

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

Generally, the primary purpose of life insurance is to provide a tax-advantaged investment plan.

False

Standard homeowner's policies will not include coverage for damage done by __________.

Flood

___________ insurance is a type of insurance that is issued in policies with small face amounts, often $1,000 or less.

Industrial Life

The probability of a loss occurring can be reduced by_____.

Loss Prevention

The purchase of insurance is a common form of _____ by the insured.

Risk Transfer

Funds for Medicare benefits come from:

Social Security taxes paid by covered workers and their employers

Medicare is a government-sponsored health care plan composed of Part A and Part B. Part A provides ___________.

inpatient hospital services

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 factor that is likely to have the greatest effect on the cost of automobile insurance is the __________.

owner's driving record

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

The purchasing power of income from a long-term disability policy is protected by _____.

the Cost-of-living adjustment (COLA) provision

A homeowner's policy does not provide protection for:

the personal property of tenants

Insurance underwriting is best described as:

the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.

Dependent children ___________ will usually be covered by your health insurance policy.

up to a stated maximum age

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

A $100,000/$300,000 bodily injury liability automobile policy could pay up to a total of __________ to all injured victims in one accident.

$100,000

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