FIN 101 Ch. 9

Kenneth is wondering what maximum benefit limit he should choose if he expects the cost of long-term care coverage to be $260 per day and he anticipates needing long-term care services for 3 years (assuming a 360-day billing cycle).

$280800.

Using the income multiplier estimation method, how much life insurance would you need if your current income is $45400?

$454000

Kenneth has a health insurance policy with the following provisions: $470 deductible, $50 copay, and 80/20 coinsurance provision. If Kenneth has an accident that costs $2815 in medical expenses, how much will he have to pay out of pocket?

$979.

A government-supported health insurance program that is designed to provide coverage to those currently living in poverty is called:

Medicaid.

Michelle and Jerry are each planning to apply for disability insurance coverage from a private insurance firm. Although Michelle and Jerry are the same age and have the same health profile, Michelle's premium is lower. What explains this phenomenon?

Men are more likely to become disabled.

Which of the following are forms of cash-value life insurance?

Universal, variable, and variable universal

Renter's insurance typically covers:

loss of personal property, loss of use of property, and personal liability.

The cost of insurance increases as the:

severity and frequency of a loss increases.

Insurance policy owners can list contingent beneficiaries. Contingent beneficiaries:

will receive the death benefit if the primary beneficiary dies before the policy owner.

Human capital refers to your ability to:

work and / or learn.

According to the Social Security Administration, disability means:

you are unable to do the work you did before your illness or accident and it is expected to last one year or longer.

For someone with a limited budget, which type of policy makes most sense?

Term life policy.

Which of the following statements regarding term-life insurance is INCORRECT?

Term-life insurance is intended to provide lifetime insurance protection.

How does risk affect insurance premiums?

As risk increases premiums increase.

The best strategy for dealing with health risks is:

Avoiding and managing health risks.

What type of coverage pays for things like broken glass and vandalism to your car?

Comprehensive coverage.

A Health Savings Account (HSA) is a tax-advantaged savings account that can be set up to pay out-of-pocket healthcare expenses. What else is true of HSAs?

HSAs are great tools for healthcare expenses and retirement goals.

you are unable to do the work you did before your illness or accident and it is expected to last one year or longer.

Pay burial costs, final debts, and final expenses.

Which of the following refers to the cost of the insurance?

Premium.

What does replacement coverage ensure?

The full replacement cost of items will be paid

Under which of the following circumstances may life insurance be unnecessary?

You and your fiancée are getting married in 1 year and both of you work full-time.

Lamar is faced with a high frequency high severity risk. According to the risk matrix, Lamar should

avoid the risk.

The ________ receives the policy death benefit when the insured dies, whereas the _______ is the person who makes premium payments.

beneficiary; policy owner

The amount you must pay before your insurance company makes a payment on a claim is called the:

deductible.

The number-one determinant of someone's health is _____________________, followed by _____________.

health behavior; genetic disposition.

The 50 in a 50/100/25 split limit policy refers to the maximum amount the policy will pay in:

medical coverage for one person in the other car.

If Nicole buys health insurance, she is effectively:

transferring the risk of high health-related expenses to an insurance company.