FIN Exam 3 (61-73)

Comprehensive Physical Damage Coverage

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

$130,000 Multiply the number of years required for the youngest child (5) to reach 18 x the estimated extra cost (experts typically say $10,000) 13 x $10,000 = $130,000

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?

All of these are covered- 1) A detached garage 2) Trees and shrubs. 3) A toolshed. 4) Personal property.

Homeowner's insurance covers all of the following except

Risk Assumption

If you choose to take responsibility for the negative results of a risk, you are using

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

Liability is defined as

$98,000 *DINK Method* (Dule Income, No Kids) - Half of all Debts + Funeral Expenses Debts: $125,000 + $25,000 + $22,000 = $172,000 (1/2 is $86,000) So $86,000 + $12,000 = $98,000

Marianne and Roger are in good health and have reasonably secure careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. If one should die, they think that funeral expenses would be $12,000. What is their total insurance need using the *DINK method?*

Coinsurance

Nancy is studying the health insurance plan options offered by her employer. She wants a policy that will have the *insurance pay a percentage of her medical expenses* after she meets her deductible. She should review the?

$196,000 Easy Method - Gross Annual Income ($40,000) x 7 x 0.70 = $196,000

Stephanie is the wage earner in a "typical family" with $40,000 gross annual income. Use the *Easy Method* to determine how much insurance she should carry.

Negligence

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

$140,000 Multiply the number of years required for the youngest child (4) to reach 18 x the estimated extra cost (experts typically say $10,000) 14 x $10,000 = $140,000

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 *"nonworking" spouse method?*

$343,000 Easy Method - Annual income ($70,000) x 7 x 0.70 = $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?*

All of these should provide a discount for Tom- 1) Smoke detector. 2) Fire extinguisher. 3) Deadbolt locks. 4) Alarm systems.

Tom wanted to receive as many discounts on his home insurance as possible. Which of the following would NOT provide a discount?

All of the these may be available to drivers- 1) Wage loss insurance 2) Towing and emergency road service coverage 3) Rental reimbursement coverage

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