Test #2

The grace period

Georgia was supposed to pay her premium by the 15th of the month. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium (without penalty)?

Family need method

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. Which method are they using to determine their life insurance needs?

contingency clause

Madeline wants to purchase a larger house. However, she has not yet sold her current home. She may want to include a(n) ________ in her offer.

Social Security.

Mark was severely injured while on vacation and expects to be unable to work for at least 12 months. Because of his injury, he should expect to be eligible for disability income from

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Medicaid covers Lab services. Skilled nursing and home health services. Prescription drugs. Eyeglasses. All of these.

Variable life

Megan wants to purchase a type of whole life insurance policy that will allow part of her premium to be invested in stock, bonds, or money market funds. Which of the following policies should she buy?

Extended coverage for air conditioning.

Mike bought a new car. His new car warranty probably included all of the following except overage of basic parts against defects. Corrosion warranty. Extended coverage for air conditioning. Possibility to transfer the warranty to other owners of the car (additional charges may apply). Power train coverage.

A reverse mortgage

Provides older home owners with tax-free income in the form of a loan that is repaid when the home is sold or the home owner dies.

Points

Rebecca paid extra money to reduce her mortgage interest rate. That extra money is called

Health maintenance organization (HMO)

Steve's employer offers a health plan that stresses preventive services and covers routine immunizations and checkups, screening programs, and diagnostic tests. What kind of plan does his employer offer?

$10,000

The average used car costs about _______ less than the average new car.

Invoice price

The dealer's cost is also known as the

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The duration of benefits for a disability income insurance plan can be For only a few years. Until age 65. For life. All of these are possibilities. None of these is correct.

Negligence.

The failure to take ordinary or reasonable care to prevent accidents from happening is called

Liability

The legal responsibility for the financial cost of another person's losses or injuries.

Capitalized cost

The price of a leased vehicle is known as the

Limited installment payment.

The settlement option that pays the life insurance proceeds in equal periodic installments for a specified number of years after your death is called

Physician expense

The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests is

Assigned benefits

This health insurance provision lets your insurer make direct payments to your doctor or hospital.

Warranty

This is a written guarantee from the manufacturer that specifies the conditions under which the product can be returned, replaced, or repaired.

Multiyear level term

This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy.

$343,000

Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. They have determined that their annual income is $70,000 and their net worth is now $150,000. What is the amount of life insurance they should carry using the easy method?

Personal property insurance

covers personal property items up to 55-75% of the insured value of the home.

Individual retirement accounts (IRAs).

A primary reason for buying an annuities is for

Internal limit.

A provision in a health insurance policy that sets specific levels of repayment for certain services is called

Maintenance and repairs

A variable operating cost for a vehicle is

Capitalized cost

A vehicle lease has several costs. Which of the following is the price of the vehicle?

Cost-of-living protection

A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider?

A policyholder.

An individual who purchases an insurance policy is called

Term life insurance.

Another name for temporary life insurance is

Coordination of benefits (COB)

Combining the benefits of two insurance policies issued for a married couple

Negligence.

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The fact that Barbara didn't put away the skateboard is called

$126,360

Brett bought a house five years ago for $150,000. At that time he borrowed $140,000 from his bank. The house is now worth $162,000. The current value of his mortgage must be no higher than --- for him to request termination of his PMI policy.

An advantage is that the down payment required is less than the security deposit for a rental.

Donald wanted to buy a house in the country, so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect? An advantage is that Donald can deduct mortgage interest and real estate taxes. A disadvantage is that Donald is responsible for maintenance and costs of repairs and home improvements. An advantage is that the down payment required is less than the security deposit for a rental. A disadvantage is that real estate taxes are a major expense for homeowners. An advantage is that Donald can paint his house bright purple with green trim to match his college's colors.

Townhouse.

Elaine purchased her living unit in a building with five other separate units. She purchased a

Theft of jewelry valued at $25,000.

Homeowner's insurance covers all of the following except Furniture. Theft of jewelry valued at $25,000. Appliance. Clothing. Rental rug cleaner.

HO-8

Homeowner's insurance includes all of the forms listed here except HO-1. HO-2. HO-5. HO-6. HO-8.

Risk reduction

If you choose to wear your seatbelt, you are using

$180.50

If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward principal?

Small claims court

If you have a problem whose remedy will be between $1,500 and $3,000, the appropriate tool to use would be (a)

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In which circumstances may the right to elect continued coverage under COBRA exist for a covered spouse or dependent? Divorce. Legal separation. Loss of dependent child status. The covered employee's death. All of these.

Medigap.

Individuals over the age of 65 who are eligible for medicare may also be interested in purchasing more coverage called

4800

Larry has a health insurance policy that includes a deductible of $1,000 and a coinsurance of 20%. If his total bill is $7,000, how much will his insurance pay?

$225,000

Last month some of your friends were injured in an accident. Their total injuries were as follows: Brenda 85000 Raquel 125000 Louis 40000 Coverage was 100/300/50. What was the total medical coverage in this accident?

Long product lives

Most customer complaints result from the all of the following except Deceptive pricing. Defective products. Long product lives. Low-quality products. Unexpected costs

Protect the people who depend on the insured from financial losses caused by his or her death.

Most people buy life insurance to

Bodily injury liability of all expenses, no matter the cost, for the most injured.

Motor vehicle bodily injury coverage typically includes all of the following except

Private mortgage insurance

Must be terminated automatically when the homeowner's equity reaches 22% of the property value at the time the mortgage was executed.

selection and purchase

Negotiation activities are part of the ____ phase of the research-based buying process.

Property damage liability coverage.

Patrick has an old car and wants to keep his insurance costs down, but he wants coverage in case he damages the property of others, including street signs and telephone poles. In order to minimize the financial impact of an accident he may cause, he should, at a minimum, carry which type of insurance?

ARM.

Ursula wants to have an interest rate that can increase or decrease during the life of her loan. She should look for a(n)

Help you select the proper kind of protection within your financial boundaries.

What is the most important part of an insurance agent's job?

Home appraisal.

When Ingrid was selling her house, she contacted Gabe, her real estate agent, to help her with the sale. Gabe's services included all of the following except

Variable annuity

Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?

Immediate annuity

Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now?

all

Which of the following are associated with a vehicle lease? Capitalized cost. Money factor. Payment schedule. Residual value. All of these.

Property taxes.

Which of the following expenses is NOT usually incurred by a tenant? Security deposit. Utilities (other than water). Renter's insurance. Property taxes. None of these are incurred.

Each policy covers a wide range of conditions.

Which of the following is INCORRECT about dread disease policies? They are illegal in many states. Each policy covers a wide range of conditions. They play upon unrealistic fears. These policies are usually sold through the mail, in newspapers, and magazines, or by door-to-door salespeople. They cover diseases that are already covered if you are insured under a major medical plan.

Decreasing term

Which of the following is NOT a type of permanent life insurance? Whole life Variable life Universal life Adjustable life Decreasing term

When showing the home, Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image.

Which of the following is NOT correct? Alex's daily maintenance and timely repairs around his home should make it attractive to potential buyers. Brenda's new hot tub will probably not increase the selling price. When showing the home, Caryn's suggestion to open drapes but keep lights turned off to conserve energy will give her property a positive image. Darryl's decision to sell his house "by owner" could save him several thousands of dollars in commission. Eric's listing with a real estate agent will provide him with services such as advice on features of his home to highlight.

The cost and number of claims you have should not affect your premium.

Which of the following is NOT correct? If you live in a rural area, your auto insurance premium will likely be lower than if you live in a large city. In general, young drivers (under 25) and elderly drivers (over 70) have more frequent and more serious accidents. Multiple accidents or tickets will increase insurance rates. The cost and number of claims you have should not affect your premium. Your credit score can cause your premium to change.

Traditional financial guidelines suggest that your home should cost about five times your annual income.

Which of the following is NOT correct? Renting is usually less costly in the short run. Home ownership usually has long-term financial advantages. Lifestyle and financial factors should be analyzed to determine if you should rent or buy. Traditional financial guidelines suggest that your home should cost about five times your annual income. Renting offers mobility.

Health insurance plans may reimburse an individual for hospital stays, doctors' visits, and medications.

Which of the following is correct? A premium reimburses you for hospital stays, doctors' visits, and medications. A premium is the amount your employer will pay for your health insurance coverage. Disability income insurance pays actual medical costs. Medical expense insurance provides payments to make up for income of a person who cannot work as a result of injury or illness. Health insurance plans may reimburse an individual for hospital stays, doctors' visits, and medications.

One question that should be asked when developing a risk management plan is "What do I need to insure?"

Which of the following is correct? The best risk management plan is one that does not change throughout one's life. Once a plan is set up, it should be reviewed every 10 years. A solid risk management plan works well without insurance as a component. One question that should be asked when developing a risk management plan is "What do I need to insure?" The main goal of insurance should be to maximize personal, property, and liability risks.

A legal aid society

Which of the following is not a legal option for high-income consumers?

Policy reinstatement

Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?

Impulse shopping

While Paul was shopping for a new chainsaw, he found a great deal on a new drill and bought it. This is an example of

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While evaluating alternatives, all of the following are appropriate questions you could ask before making a major purchase except Is it possible to delay the purchase or to do without the item? Should I pay for the item with cash or buy it on credit? Which brands should I consider? How do the price, quality, and service compare at different stores? All of these are questions that should be asked.

An elderly neighbor.

Who is most likely to use a home health care agency?

If you have a loss due to a flood

You must have already purchased special coverage if you live in an area that has frequent floods in order to be covered.

Payment cap.

Yvette has a flexible-rate mortgage that limits the amount to which her monthly payments can rise. This feature is called a(n)

He should insure the building under the replacement value method to receive the full cost of repairing or replacing it.

Zach is applying for insurance for his new home. Which of the following is correct?

Lessor

the owner/landlord is known as the