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