Finance Exam 3

A health insurance deductible is a. the portion of health expenses that you pay as you use medical services. b. the amount taken out of your paycheck for health insurance. c. the discount your insurance has negotiated with your health care provider. d. The amount the government takes out of your paycheck for health care.

a

After bankruptcy, what is the best way to build credit? a. Get a secured credit card b. Get an unsecured credit card c. Don't worry about credit; it got you in trouble in the first place d. Take out a loan

a

If you are at fault in an auto accident and your passenger sustains injuries and is required to go to a hospital for treatment, what type of insurance will cover those expenses? a. Liability (C2) b. Collision c. Comprehensive d. Health

a

In stopping little financial leaks, what are the first things you need to sort out? a. Needs from wants b. Bills from payments c. Ongoing bills vs. one-time payments d. Giving vs. spending

a

What is the maximum amount of coverage of a 20/40/15 policy? a. $75,000 b. $55,000 c. $40,000 d. $35,000

a

Which risk does your homeowner's insurance usually cover? a. Volcanic eruptions b. Flood c. Earthquake d. All of the options are correct.

a

With health insurance, the co-payment is a. the amount you must pay before insurance pays. b. not counted against your out-of-pocket maximum. c. included in your premium. d. covered under Medicaid.

a

You back out of your driveway and hit your neighbor's car. What type of auto insurance must you have in order to get your neighbor's car repaired? a. Liability b. Collision c. Comprehensive d. Uninsured motorist

a

Your insurance deductible is a. the amount you have to pay if you make an insurance claim. b. the cost of insurance that is deducted from your paycheck. c. the maximum the insurance company will pay. d. a fee the insurance company charges.

a

What is the 10-second rule? a. If you drop an item in a store, it's still safe to pick it up after 10 seconds b. Hold an item for 10 seconds before you put it in your cart, asking yourself if you really need the item and, can afford to pay for it c. Put an item in your cart and, if you don't want it after 10 seconds take it out d. All of the choices are correct.

b

Which of the following is not a question to ask when trimming expenses? a. Can I get a lower rate on insurance? b. Can I eat out more? c. Can I live in a less expensive house? d. Can I cut down my utilities?

b

You back out of your driveway and hit your neighbor's car. What type of auto insurance must you have in order to get your car repaired? a. Liability b. Collision c. Comprehensive d. Uninsured motorist

b

Why do you need to purchase insurance? a. To cover your assets b. To protect your personal wealth c. To limit your liability d. All options are correct

d

Your car is hit by a motorist who stole a car and then took off. Your car is totalled, and you, luckily, escape with only minor injuries. What type of auto insurance must you have in order to get your car repaired? a. Liability b. Collision c. Comprehensive d. Uninsured motorist/underinsured motorist

d

Paying rent, gas, and utilities and buying groceries are examples of what kind of spending? a. Necessary b. Non-essential c. All of the choices are correct. d. None of the choices are correct.

a

What is the difference between liability and full coverage auto insurance? a. Liability insurance only covers the driver's legal responsibilities if they are at fault in an accident. b. Full coverage includes liability plus comprehensive coverage but not collision insurance. c. Liability, in general, costs more than full coverage. d. You are required by law to have full coverage until you are age 21.

a

Which of the following are short-term solutions if you are at risk for foreclosure? a. Reinstatement b. Loan modifications c. Loan defaults d. Partial claim

a

Which of the following is not a red flag warning? a. No savings in place b. Borrowing from family members or friends to cover payments c. Using payday loan cash advances on your credit cards d. Tapping home equity lines to pay off your credit cards

a

An independent insurance agent can sell you insurance: a. from only one company. b. from any company she represents. c. only on your automobile. d. at a cheaper rate than if you were to purchase insurance online.

b

Borrowing money from family and friends is a a. yellow flag warning: caution. b. red flag warning: danger. c. green flag warning: go ahead. d. none of the choices are correct.

b

How do independent agents differ from company insurance agents? a. Company insurance agents may represent a single company provider who sells insurance from many companies. b. Independent insurance agents represent more than one insurance company and can sell insurance from a wide range of insurance companies. c. There is no difference between an independent and company insurance agent. d. Independent insurance agents represent one insurance company.

b

If a lender agrees to new loan terms in an attempt to help a homeowner, and the terms of the new agreement are met, this constitutes a a. foreclosure. b. loan modification. c. forbearance. d. cramdown.

b

Insurance riders a. cover passengers in your automobile. b. are additional insurance to protect specific items of value not covered on your primary policy. c. are extremely expensive and not worth getting. d. provide protection when dealing with the underinsured.

b

The fastest way to get out of debt is to a. buy things you don't need. b. don't to not buy things you cannot afford. c. refinance to get better interest rates. d. All of the choices are correct.

b

The insurance declaration page states a. the cost of insurance. b. the maximum an insurance company will pay. c. who is not covered under the policy. d. All options are correct.

b

You have three credit cards, each of which has a balance due. Which should you pay off first? a. The largest balance b. The smallest balance c. Neither; pay some of each every month d. All of the choices are incorrect.

b

During the process of foreclosure, at which step does the lender begin to become concerned? a. You missed the first payment. b. You are unable to make your payment. c. You miss your second payment. d. You miss your third payment.

c

How does Chapter 7 bankruptcy differ from Chapter 13 bankruptcy? a. Chapter 7 is the quickest and simplest form of bankruptcy b. In a Chapter 13 bankruptcy, the debtor proposes a plan of reorganization to keep his or her assets and pay creditors over an extended time period c. Both are correct. d. Neither is correct.

c

Minimum automobile liability insurance is a. not something you need, but is a suggested amount of coverage. b. Is the same in every state. c. Is different in every state. d. Is sufficient to cover your legal responsibilities if you cause an accident.

c

To keep yourself from using your credit card, you should a. destroy it. b. hide it. c. leave it at home. d. keep it in your wallet.

c

What is the coverage of a 20/40/15 policy? a. $20,000 for personal property liability/$40,000 bodily injury liability for all people injured in an accident/$15,000 for additional auto liability b. $20,000 for personal property liability/$40,000 bodily injury liability for all people injured in an accident/$15,000 car rental rider c. $20,000 for bodily injury liability for one person in an accident/$40,000 bodily injury liability for all people injured in an accident/$15,000 personal property liability d. $20,000 for uninsured coverage/$40,000 bodily injury liability for all people injured in an accident/$15,000 personal property liability

c

What is the difference between replacement value and actual value for personal property insurance? a. Actual value is the cost to replace an item. b. Replacement value is the amount you could get for selling the item at a garage sale. c. Replacement value is typically the current retail cost to replace the item. d. Actual value is typically greater than replacement value.

c

What is the minimum amount of money you should have in your emergency fund account, and once you have that, what should your next goal be? a. $750; 3 months' wages b. $500; 4 months' wages c. $1,000; 6 months' wages d. $1,500; 6 months' wages

c

When borrowing money for a vehicle, who is typically the lien holder and loss payee on the insurance? a. The primary driver of the car b. The owner as noted on the title of the vehicle c. The lending financial institution d. The payer of the insurance

c

Which of these factors contributes to the calculation of auto insurance premiums? a. Credit history b. Driving record c. Both credit history and driving record d. Gas mileage over the last month

c

You are driving on a back country road and hit a deer. What type of auto insurance must you have in order to get your car repaired? a. Liability b. Collision c. Comprehensive d. Uninsured motorist

c

A home inventory a. helps you recall your personal possessions in case of fire, theft, or destroyed property. b. should be documented with video or photographs. c. should be kept in a secure, off-site location. d. All of the options are correct.

d

All are yellow flag warning signs that you are headed toward financial trouble with the exception of a. no emergency fund. b. charging expenses without a payoff plan. c. living paycheck-to-paycheck. d. increasing asset-to-debt ratio.

d

Buying a soda from the vending machine every morning before class is an example of a. convenience drinks. b. everyday habits. c. everyday necessity. d. non-essential spending.

d

Flood insurance is a. automatically included in your homeowner's insurance policy. b. only required if you live near a river. c. not important if I live in the 500-year flood plain. d. purchased from the National Flood Insurance Program.

d

What is the difference between a Chapter 7 and a Chapter 13 bankruptcy? a. Chapter 7 liquidates all of your debts. b. Chapter 13 liquidates all of your assets. c. In a Chapter 7 bankruptcy, you do not have to pay off anything. d. In a Chapter 13 bankruptcy, you pay off your debt over a period of 3 to 5 years.

d

What type of insurance covers you, your passengers, and your vehicle if you are in an accident that is not your fault? a. The at-fault driver's insurance b. Your uninsured/underinsured motorist insurance c. Your liability insurance d. Both the at-fault driver's insurance AND your uninsured/underinsured motorist insurance

d

What type of insurance does not cover your personal property? a. Homeowner's b. Renter's c. Comprehensive d. Health

d

Which is a way to stop little financial leaks? a. Cutting coupons b. Pack your lunch c. Avoid the malls when bored or depressed d. All of the choices are correct.

d

Which is not an early warning sign of financial trouble to come in the future? a. Not having an emergency fund b. Paying only the minimum amount on a credit card bill c. Not having a monthly budget d. Investing in a 401(k) or a 403(b) plan

d

Who regulates insurance companies? a. Fair Trade Board b. Commissioner of Trade c. Federal Insurance Commissioner d. State Insurance Commissioner

d