FIN 3325 - Exam 3 Key Terms

Sally was driving her own car and collided with a pickup truck. Sally sustained $125,000 in injuries, and her passenger sustained $10,000 in injuries. If her coverage was 100/300/50, what are the total medical expenses the insurance company would pay for this accident?

$110K

Holly and Matt want to use the "nonworking" spouse method to determine the amount of life insurance coverage they need. If their two children are ages 9 and 5 years old, how much do they need?

$130K

Cynthia was charged $300 for a specialist office visit. Her indemnity policy will pay $125. What amount will she have to pay?

$175

Georgia has a health insurance policy that includes a deductible of $500. If her total bill is $3,000, how much will her insurance pay?

$2500

Georgia is considering between two health insurance policies. One includes a deductible of $600 and the other includes a coinsurance of 20%. If a bill is $4,000, how much will she be required to pay under the policy with the coinsurance?

$800

Molly is thinking about buying a type of whole life insurance policy, but she is not sure about how much she will need in the next few years. She may need to change her coverage as her needs change. Which of the following policies would meet her needs?

adjustable life

Which of the following about individual health insurance policies is not correct?

all insurance companied that offer this type of policy are required to charge the same rates

Medicaid covers

all of these

Which of the following activities is not a step being taken to reduce health care costs?

all of these activities can reduce health care costs

Most common risks are

all of these are common risks

Duration of benefits for a disability income insurance plan can be

all of these are possibilities

All of the following are sources of disability income except

all of these are sources of disability income

Which of the following is a type of motor vehicle insurance available to drivers?

all of these may be available to drivers

Which of the following questions should one ask when developing a risk management plan?

all of these questions should be asked

Which of the following statements is correct?

an immediate annuity allows an individual to receive income payments from an annuity beginning at once

Medical payments coverage applies to medical expenses of

anyone who is injured in your vehicle, including you

Homeowner's insurance covers all of the following except

automobiles

Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life?

fixed annuity

Pam just started working at XYZ Widget Company and finally wants to get insurance coverage through her employer. She does not want to take a medical exam to get coverage, because she has some underlying health conditions and is concerned that she might not qualify for a policy. Which of the following life insurance policies should she apply for?

group life

If you are concerned that your disability insurer may try to cancel your coverage if your health becomes poor, you should look for a plan that offers

guaranteed renewability

Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a

hazard

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

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

Which of the following is correct?

health insurance plans may reimburse an individual for hospital stays, doctor visits, and medications

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

his coverage should be increased as construction costs rise

Which type of insurance pays part or all of your hospital bills for room, board, and other charges?

hospital expense insurance

Factors that insurance companies consider when determining premiums for auto insurance include all of the following, except

household income

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

immediate annuity

An insurance company will

insure pure risk but not speculative risk

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

internal limit

All of the following are actions that you can take to reduce your auto insurance premiums and qualify for discounts, except

keeping poor driving habits

The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives is called

life income option

Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?

location of employer

Which of the following should reduce your auto insurance premium?

maintain good grades in college

The type of health insurance coverage that takes up where basic health insurance coverage leaves off is

major medical expense

All of the following are purposes of life insurance discussed in the video, except

maximize your likelihood of living longer

Jack needs comprehensive medical coverage. However, his income is very low. What plan should he investigate?

medicaid

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

medigap

The main goal when setting insurance goals is to

minimize personal, property, and liability risks

_______ life insurance policy will guarantee that you will pay the same premium for the duration of your policy

multiyear level term

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

negligence

Christina is 20 years old and is currently a college student majoring in Biology. Christina is also single. According to the table in the video, would Christina need Life Insurance and at what level?

no, she would not need life insurance

Which of the following is correct?

one question that should be asked when developing a risk management plan is, "what do I need to insure?"

Personal property insurance covers

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

Two basic types of risk that people face regarding potential property losses are

physical damage and damage caused by criminal behavior

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

physician expense

Which of the following is usually combined with hospital and surgical insurance and referred to as Basic Health Insurance Coverage?

physician's expense insurance

The policy loan provision means that

policy owner can borrow any amount up to the cash value of the policy

Which of the following is not a feature of whole life insurance?

policy will return all premiums if you survive to the end of the policy

Mildred was diagnosed with terminal cancer and knows that she doesn't have long to live. Which of the following riders would allow her to receive cash now?

accelerated benefits

Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?

accidental death benefit

Amber had permission from Bradley to borrow his car to run some errands. Unfortunately, while Amber was driving, she looked down to change songs on her iPod and sideswiped a car and hit a bicyclist. Based on her experience, which of the following would be true?

Amber's insurance policy should cover any property damage claims since she was driving Bradley's car with his permission

Amy bought a life insurance policy and named Ben as her beneficiary. Amy still lives with her parents who provide some of her living expenses. She has since died. Who will receive the benefits from her policy?

Ben

Blake is an employee for a corporate company and has $500 left in his account at the end of the year. Blake is staying with this company until retirement. Which type of account will let him carry over the $500 in his account to the next calendar year?

FSA

A household inventory should be stores in a home office.

False (should be stored in a secure and disaster resistant location)

Jenna currently has a job with a corporate company and will not use all of the money in her account before the end of the year. Jenna is staying with this company until she retires. Which type of account will let her carry over $1,000 in the account at the end of the current year to the next year?

HRA

Sam currently has a job with a corporate company, but he is switching jobs to work for a local company in Raleigh. Which type of account will let him take his account with him when switching jobs?

HSA

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

Social Security

Renter's insurance is relatively inexpensive while mobile home insurance is quite expensive.

True

Rising health costs are due to all of the following except

baby boomers using fewer health care services

The coinsurance clause, when related to health insurance, is a provision in which

both the insured and the insurer share the covered costs of medical treatment

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?

builds the cash value

If you want to purchase term insurance, you will receive all of the following except

cash value

Which type of coverage has a low deductible, is all-inclusive, helps to pay hospital and surgical medical bills, and is offered without a separate basic plan?

comprehensive major medical coverage

The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a

comprehensive major medical policy

Albert left his vehicle parked on the street in the front of his house when he went on vacation. While he was gone, his street flooded and his car was severely damaged. This damage would be covered under his

comprehensive physical damage coverage

Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his

comprehensive physical damage coverage

Samantha was driving on the highway during a storm and hail dented her car. The damage would be covered under her

comprehensive physical damage coverage

Zachary lived in a neighborhood that was known for gang activity. One day, he noticed that his car had been vandalized. This damage would be covered under his

comprehensive physical damage coverage

Jenny wants health insurance that sets the amount that she must pay toward medical expenses before the insurance starts paying benefits. She is concerned about a

deductible

Why is it important to compare auto insurance premiums?

different insurance companies, even in the same geographic area, can have premiums that vary as much as 100%

Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears. He is most concerned about a

dread disease policy

Donald and Charlene are married and do not have any children. They plan to ensure that the other will not be unduly burdened by debts in case one of them dies. Each plans to continue to work after the other one dies. Which method are they using to determine their life insurance needs?

dual income, no kids method

Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula: Current income × 7 × 70%. Which method are they using to determine their life insurance needs?

easy method

Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct?

policy would provide a max of $100K for each person injured, and no more than $300K for total injuries of all parties in the accident

Yvonne's employer offers a health plan that has a group of doctors and hospitals that agree to provide specified medical services to members at prearranged fees. This health plan offers some flexibility since members can either visit a physician from a list or go to their own doctors. What kind of plan does her employer offer?

preferred provider organization (PPO)

Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing. The damage to the telephone pole would be covered under Madeline's

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?

property damage liability coverage

A health insurance plan should include all of the following "must-haves" except

provide a lifetime maximum level of coverage of up to $50K

Which of the following is not correct about renters insurance?

renters insurance covers the building and other structures on the site

If you choose to avoid the risk of a traffic accident by not driving to work, you are using

risk avoidance

Which of the following is not one of the commonly used general risk management techniques?

risk maximization

If you choose to wear your seatbelt, you are using

risk reduction

If you choose to insure your home or your vehicle, you are using

risk shifting

An insurance company is a _______ business that agrees to pay for losses that may happen to someone it insures.

risk-sharing

A health insurance policy with this provision lists coverage in terms of services, not dollar amounts.

service benefits

Blue Cross Blue Shield is a

statewide organization

Fran is interested in purchasing a major medical policy that limits the total out-of-pocket amount that she will have to pay. She should consider a

stop-loss provision

The type of health insurance coverage that may specify the maximum payment amount for each type of operation is

surgical expense

Another name for temporary life insurance is

term life insurance

Liability is defined as

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

Homeowner's insurance covers all of the following except

theft of jewelry valued at $25K

A limited payment policy is a type of whole life policy that requires premiums to be paid for a certain length of time, usually 20 or 30 years.

true

The most widely used settlement option for a life insurance program is the lump-sum payment.

true

Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60. Which of the following riders should he consider?

waiver of premium disability benefit

Which of the following is not temporary insurance?

whole life

Stan is 30 years old and is married to Catherine who is 27 years old. Stan and Catherine had their first child a year ago and are looking to adopt a child this summer. According to the table in the video, would Stan need Life Insurance and at what level?

yes, he would need a substantial amount

If you have a conversion term policy,

you can convert your term policy to a permanent policy

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

All of the following are situations that could cause your insurance premium to increase or decrease, except

your neighborhood has a homeowner's association

If you have a multiyear level term policy,

your premium will be the same for the duration of your policy