Personal Finance Chapters 8-10

The maximum coverage under most dental policies is often in the range of _____ per patient.

$1,000 to $2,500

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

$1,000,000

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

False

Which of the following homeowner's policies is best suited to a renter of an apartment?

HO-4

_____ is the choice to accept and bear the risk of loss.

Risk assumption

Which of the following statements regarding risk avoidance is true?

Risk avoidance is any activity that helps evade an act that creates a risk

Which of the following types of insurance policies provides temporary coverage for a set period?

Term life insurance policy

Universal life insurance is:

a combined savings/investment plan and insurance policy

Medicare and Medicaid cover:

between 0 and 50% of the total cost of long-term care.

Negligence occurs when someone:

fails to act in a reasonable manner.

A coordination of benefits provision in a health care policy _____ by collecting benefits in multiple payments for health care.

prohibits collecting more than 100% of covered charges

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

risk transfer

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.

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

the cost-of-living adjustment (COLA) provision.

Underwriting refers to:

the determination of which exposures to insure.

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.

Part A liability coverage under a personal automobile policy may be viewed as "following":

the vehicle.

A personal liability umbrella policy is more likely to be opted for by people:

with a moderate to high level of income and net worth

_____ is a health care plan in which subscribers/users contract with the provider organization, which uses a designated group of providers meeting specific selection standards to furnish health care services for a monthly fee.

A managed care plan

The cost of workers' compensation insurance is usually paid by the employees.

False

The need for life insurance increases with children.

True

The premiums for homeowner's insurance policies are affected by the type of structure and its location.

True

During the past few decades, the percentage of our income spent on health care:

has increased due to an aging U.S. population.

A(n) _____ agent represents multiple insurance companies.

independent

The personal property floater:

provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy.

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

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

It can be difficult to evaluate the true cost of a _____ policy at the time of purchase.

universal life insurance

A $300,000/$500,000 bodily injury liability automobile policy could pay _____ to all injured victims in one accident.

up to a total of $500,000

Medicare's 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

The community rating approach to health insurance premium pricing:

prohibits insurance companies from varying rates based on health status or claims history.

A captive agent typically represents two to ten different insurance companies.

False

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

False

Group insurance plans are legally required to extend health insurance benefits to retirees.

False

Insurance agents are legally required to disclose their commissions in an insurance policy.

False

Long-term-care insurance provides protection against the cost of extended hospital stays.

False

Social Security disability income benefits are available only when someone is permanently unable to do any job.

False

The primary purpose of life insurance is to provide a tax-advantaged investment plan.

False

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 homeowner's policies provides coverage for damage caused by electrical current?

HO-2

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

A preferred provider organization has characteristics of both an individual practice association (IPA) and an indemnity plan.

True

Guaranteed renewable term insurance allows you to renew a policy for another term without qualifying medically.

True

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

True

If a term life insurance is convertible, the policy can be:

changed to a comparable whole life policy

Comprehensive automobile coverage refers to:

coverage for damage to an insured automobile from perils (with a few exceptions) other than collision.

The _____ represents the initial amount that's not covered by the policy and thus must be paid by the insured.

deductible

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

flood.

In a traditional indemnity (fee-for-service) plan, the:

health care provider and the insurer are separate.

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

industrial life insurance

Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80% of the amount that it would cost to build them today, _____ can cause the actual amount of coverage to fall below 80%.

inflation

Medicare 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

A captive agent is a(n):

insurance agent who represents only one insurance company.

When insuring property, people need to consider not only replacing and restoring the actual property in the event of a loss, but also the:

liability arising from the insured's responsibility for property loss.

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

When offering a flexible-benefit plan, most employers will set up a salary reduction agreement with an employee if the employee:

needs additional insurance benefits.

A good health insurance plan embodies more than financing medical expenses, lost income, and replacement services; it incorporates:

other means of risk reduction such as risk avoidance

Insurance companies make profit by:

paying out less than the sum of the premiums and the earnings on them.

A(n) _____ covers the cost of visits to a doctor's office or for a doctor's hospital visits, including consultation with a specialist.

regular medical expense insurance