Final Exam Your Money and credit Uark

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. a. insurance b. underwriting c. debt d. reimbursement e. risk

A

At the scene of an accident, the police are only responsible for assessing the: a. probability of a law violation. b. liability of the insurance company. c. amount of claim. d. extent of any injuries. e. amount of loss.

A

Avoiding alcoholic beverages while driving is an example of loss prevention. a. True b. False

A

Never discuss liability at the scene of an accident, or with anyone other than the police and your insurer. a. True b. False

A

One of the key goals of the Affordable Health Care Act of 2010 is: a. to reduce the number of uninsured citizens in the country. b. to provide health care coverage to employers employing less than 50 full-time employees. c. to increase the amount of Social Security taxes. d. to underwrite the employee health care coverage on behalf of employers. e. to penalize employers for employees' job-related illness or injury.

A

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

A

Which of the following homeowner's policies provides coverage for the damage caused by the accidental discharge of water or steam? a. HO-2 b. HO-1 c. HO-9 d. HO-7 e. HO-8

A

A $300,000/$500,000 bodily injury liability automobile policy could pay _____ to all injured victims in one accident. a. up to a total of $200,000 b. up to a total of $500,000 c. up to a total of $300,000 d. up to a total of $800,000 e. an unlimited award

B

Advances in medical technology, drug prescriptions, and treatments have substantially reduced the cost of health care in recent decades. a. True b. False

B

Floods are covered under most homeowner's insurance policies. a. True b. False

B

Insurance companies make profit by: a. charging consultation fees to the insured. b. paying out less than the sum of the premiums and the earnings on them. c. avoiding the risk of loss of the insured. d. giving less than the amount mentioned in the policy to the insured. e. charging underwriting fees from insurance agents.

B

Large employers are less likely to offer health insurance to their employees than small employers. a. True b. False

B

Risk avoidance involves asking an insurance company to take over the risk in exchange for a small payment. a. True b. False

B

Section I of a homeowner's insurance policy covers: a. the cost of defending the insured. b. the dwelling, accompanying structures, and personal property of the insured. c. hospitalization costs provided to the insured. d. the liability for negligence of the insured. e. the reasonable expenses incurred by an insured in helping the insurance company's defense.

B

The cost of workers' compensation insurance is usually paid by the employees. a. True b. False

B

The purchase of insurance is a common form of _____ by the insured. a. loss control b. risk transfer c. risk avoidance d. loss prevention e. risk assumption

B

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

B

he primary purpose of life insurance is to provide a tax-advantaged investment plan. a. True b. False

B

Auto insurance is needed primarily: a. as a part of the homeowner's insurance requirements. b. to counter the effects of increasing fuel prices. c. as protection against the cost of significant loss. d. to finance automobile maintenance. e. to satisfy federal requirements for a lawful citizenship.

C

Comprehensive automobile coverage refers to: a. coverage for damage due to a multi-car collision. b. complete coverage including liability, medical payments, and damage to the automobile. c. coverage for damage to an insured automobile from perils (with a few exceptions) other than collision. d. coverage for bodily injuries suffered in an automobile accident. e. coverage that adds items of personal property, such as CB radios and telephones, that are ordinarily excluded.

C

Funds for Medicare benefits come from: a. the premiums paid by the employers for the employees. b. monthly payments by users directly to the health care service organization. c. Social Security taxes paid by covered workers and their employers. d. the health care service organization. e. the co-payment for health care services by the insured.

C

Insurance is a tool that can reduce your _____ risk. a. mental b. accident c. economic d. social e. exposure

C

The Affordable Care Act (ACA) requires insurance companies to adhere to the: a. pure community rating approach for individuals and small businesses. b. cost-of-living adjustment (COLA) for individuals and small businesses. c. adjusted community rating approach for individuals and small businesses. d. same standards used by the Social Security Administration. e. pure community rating approach for college communities.

C

Which of the following statements regarding medical insurance costs in the United States is true? a. Increased regulation and decreased administrative costs have reduced medical insurance costs in the United States. b. Advances in medical technology have decreased medical insurance costs. c. A poor demand-and-supply distribution of health care facilities and services has increased health care costs. d. Due to the financial importance of health insurance, nearly 50% of the U.S. population has health insurance. e. Health insurance does not pay for routine medical costs

C

_____ involves abstaining from any activity that will affect an individual financially. a. Risk assumption b. Loss control c. Risk avoidance d. Loss prevention e. Premium collection

C

A liability suit could result against you if: a. your son falls down the stairs of your home. b. your automobile is stolen. c. smoke from the fireplace fills your house. d. your dog bites your neighbor. e. lightning strikes your home.

D

Insurance underwriting is best described as: a. production-related activities performed primarily by agents on the field. b. a set of activities used to identify the risk and rewards of investing an insured's funds on marketable securities. c. a process of developing taxing structures for insurance policies. d. the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums. e. a function most often performed by an actuary.

D

The personal property floater: a. is a specialized inland marine policy covering boats and trailers used with boats. b. is an additional amount of insurance equal to a specified percentage of the replacement value of the property. c. is available to meet the needs of "innocent" victims of accidents who are negligently injured by uninsured, underinsured, or hit-and-run motorists. d. provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy. e. covers against liability caused by the ownership or use of items of personal property

D

The primary purpose of life insurance is to provide: a. liquidity to expand your business operations. b. high-yield investments for you and your family. c. protection from creditors and lawsuits before your death. d. financial security for your dependents after your death. e. tax-advantaged investments for your family.

D

During the past few decades, the percentage of our income spent on health care: a. has decreased due to costly advances in medical technology. b. has decreased due to increased regulation and decreased administrative costs. c. has decreased due to the reduction in health care costs. d. has increased due to advanced demand-and-supply distribution of health care facilities. e. has increased due to an aging U.S. population.

E

Negligence occurs when someone: a. fails to act as an insured. b. admits an error. c. is more than 18 years of age. d. is not insured. e. fails to act in a reasonable manner.

E

The principle of indemnity will prevent: a. a significant amount of loss control activity. b. an insurer from ever waiving its right to subrogation. c. the act of one person from being assigned to another. d. a negligent third party from being held liable for damages if the injured party is insured. e. an insured from collecting more than what he or she has lost.

E

Which of the following statements regarding private health insurance plans is true? a. In fee-for-service plans, the health care provider is the same as the insurer. b. In managed care plans, employers contract with the health care service provider. c. Group health insurance is a contract between pharmaceutical companies and the health care provider. d. In traditional indemnity plans, the insured pays 80% of the eligible health care expenses. e. In a traditional indemnity plan, the premium cost is low if it is a high-deductible plan

E

Which of the following statements regarding workers' compensation insurance is true? a. Employers who file the most claims pay the lowest premiums on the insurance coverage. b. Employees are required to bear half of the entire cost of workers' compensation insurance. c. Workers' compensation insurance includes only rehabilitation expenses. d. The federal government is responsible for workers' compensation legislation and regulation. e. Workers' compensation insurance compensates workers who are injured on the job or become ill through work-related causes.

E