FINN 1003 chapter 9-10

_____ cards offer the cardholder a way to contribute to a worthy cause and are sometimes described as "credit cards with a cause."

Affinity

Ben's health coverage charges a low ($15) deductible each time he visits the doctor or hospital. Other than the low per-service deductible, there is very little cost sharing. However, Ben must go to the health care providers listed by the provider of the health coverage. If he goes to a provider that is not on the list, there is very little coverage. Which of the following types of entity most likely provides Ben's health coverage?

HMO

Joe and Jane have a tendency to build up large balances on their credit cards. Which of the following would be least important to them?

Long grace period

Ann Marie accumulated a large balance on her credit card while in college. She is trying to get it paid off as quickly as possible and wants to roll the balance onto a new credit card. She now uses a credit card only for emergencies. What should Ann Marie look for in a credit card given the large balance and the way she plans to use the card?

Low annual percentage rate

A higher home insurance cost may result from:

Low credit scores of the insured

William uses his bank credit card frequently; however, he always pays off the total balance on the card each month. What should William look for in a credit card given the way he uses one?

No annual fee and long grace period

Which of the following leads to the payment of more insurance premium by the potential insured?

Obesity of the potential insured

Which of the following is recommended if you loan money to a friend or relative?

Put the agreement in writing.

Donna, who is single and 30-years-old, has received several speeding tickets recently and was shocked by the effect they had on her auto insurance. Donna drives a 2002 Pontiac Firebird. She is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to help Donna reduce the price of her auto insurance?

Raising her deductible from $250 to $1,000

_____ is an activity that reduces the chance that a loss will occur.

Risk avoidance

Which of the following is an appropriate reason for using a credit card?

Shopping convenience

The maximum coverage under most dental policies is often in the range of _____.

$1,000 to $2,500

Michael's estimated current monthly take-home pay is $4,500. His total existing monthly benefits is $2,950. Michael's estimated monthly disability benefits is _____.

$1,550

The annual percentage rate (APR) on a single-payment loan for $1,000 at a simple interest rate of 12% is:

12%

The Medicare co-insurance payment is typically:

20%

It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years.

25

Which of the following is true of a consumer loan?

A consumer loan is used to finance the purchase of goods that are far too expensive.

Which of the following statements is true of medical insurance costs in the U.S.?

A poor demand-and-supply distribution of health care facilities and services has increased the health care costs

Which of the following statements is true of the Affordable Health Care Act (ACA)?

The ACA eliminates lifetime limits on total health care insurance payments by insurers.

Identify a true statement about the multiple-of-earnings method.

The multiple-of-earnings method considers the insurance coverage to be 5 to 10 times the annual income.

Which of the following information can be excluded from a monthly credit card statement?

Type of goods purchased

When the simple interest method is used to determine finance charges, the interest is calculated based on the:

actual balance of the loan.

A captive agent is:

an insurance agent who represents only one insurance company

The principle of indemnity would prevent:

an insured from collecting more than he lost.

Auto insurance is needed primarily:

as protection against potential liability claims

The single most valuable technique in personal risk management to assist an individual in determining how much life insurance is needed is:

assessing the family's total economic needs and subtracting the financial resources available to meet those needs.

It is good to use credit for:

buying a car

The highest interest rate installment loans are usually made by:

consumer finance companies.

A personal liability umbrella policy typically includes:

coverage for auto related liability losses in excess of the limits purchased in the automobile insurance.

Comprehensive automobile coverage refers to:

coverage for damage to an insured automobile from perils other than collision.

Insurance is a tool that can reduce _____ risk.

economic

Chapter 7 bankruptcy will:

eliminate most of the financial obligations of the borrower.

A captive agent typically represents two to ten different insurance companies.

false

A credit card user's credit rating will be hampered if he or she pays only the minimum monthly payment on a credit card.

false

A personal property floater and a personal liability umbrella policy offer similar coverage.

false

A retail charge card can be accessed by writing checks against demand deposit.

false

Consumer loans, like open account credits, result from a rather informal process.

false

Disability occurs only when someone is completely incapable of returning to work.

false

Earthquakes are covered under most homeowner's insurance policies.

false

Finance charges are computed only on the unpaid balance from previous months' purchases.

false

Fixed-rate loans are desirable if interest rates are expected to fall over the course of the loan.

false

Generally, the primary purpose of life insurance is to provide a tax-advantaged investment plan.

false

Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.

false

If the insured has a high-risk hobby then he/she should expect to pay less for life insurance.

false

Increasing the amount of the deductible is the only way to bring down the cost of homeowner's insurance.

false

Large employers are less likely to offer health insurance to their employees than small employers.

false

Loans obtained by life insurance policyholders from their insurance companies are to be repaid on the repayment dates.

false

Medicare and Medicaid are hospital and physicians coverage, respectively.

false

Only one agent should be consulted to discuss personal financial needs and insurance requirements while buying life insurance.

false

Overspending will help you manage your budget effectively.

false

Premiums for workers' compensation are paid by the employees.

false

The add-on method is less expensive than the simple interest method when the stated rates of interest are identical.

false

The intent of the Wage Earner Plan is to eliminate most of a debtor's obligations.

false

The key to creditworthiness is to keep your debt safety ratio as high as possible.

false

The repayment period on installment loans is six to twelve months.

false

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

false

negotiate a rollover.

false

One drawback of long-term care insurance is its:

high annual premiums

A legal claim that allows creditors to liquidate a loan collateral is a:

lien.

You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. But you feel you will need life insurance for the rest of your life. You should choose a ____ insurance.

limited pay

To qualify for a subsidized Stafford loan, you must:

make satisfactory academic progress.

If you borrow money on a single-payment loan and discover that you cannot pay it back when it is due, you should:

negotiate a rollover.

When comparing credit cards, a person who pays his total outstanding balance off monthly would want a card with:

no annual fee

Disability income policies usually have a(n) _____, which is a time delay from the date of the issuance of the policy until benefit privileges are activated.

probationary period

The basic purpose of insurance is to _____.

protect yourself from economic losses

An insured individual's right to continue a health insurance policy if he or she chooses is known as:

renewability.

The purchase of insurance is a common form of _____ by the insured.

risk transfer

Persons with very poor credit ratings can still get _____ credit cards.

secured

The annual percentage rate is equivalent to the stated rate of interest when the _____ is used to calculate finance charges.

simple interest method

A homeowner's policy does not provide protection for the personal property of:

tenants.

The Affordable Care Act (ACA) requires insurance companies to adhere to:

the adjusted community rating approach for individuals and small businesses.

A life insurance policy structured so that the death benefits are paid directly to a named beneficiary means that _____.

the cash benefits from your life insurance policy cannot be claimed by creditors

Replacement cost coverage is the reimbursement of:

the cost of repairing or replacing damaged structures without deducting physical depreciation.

Underwriting is_____:

the determination of which exposures to insure.

The insured do not get the right to arbitration when:

the insurance company denies responsibility for the loss

Insurance underwriting is best described as:

the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.

People under the age of 65 years are covered by Medicare health insurance plan if:

they are injured on the job or become ill through work-related causes.

Retail charge cards are advantageous to merchants because:

they help build consumer loyalty.

Commercial banks generally charge lower interest rates than other lending institutions because:

they usually take only the best credit risks.

A preferred provider organization has characteristics of both Individual practice association (IPA) and an indemnity plan.

true

An elimination period is the number of days that must pass before disability policies pay the proceeds.

true

Avoiding alcoholic beverages while driving is an example of loss prevention.

true

Generally, insurance is more reasonably priced through group plans than as individual policies.

true

If you initiated the telephone call, it is okay to give your credit card account number when ordering/purchasing from major catalog houses, airlines, hotels, and so on.

true

It is recommended that you never give your credit card account number over the phone to people or organizations who call you.

true

Most consumer loans are made at fixed rates of interest—that is, the interest rate charged and the monthly payments remain the same over the life of the obligation.

true

Saving is the preferred way to provide for financial emergencies.

true

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

true

The need for additional life insurance can be determined by looking at the difference between available resources and family monetary needs.

true

Underwriters use life expectancy figures to look at overall longevity for various age groups and also consider specific factors related to the applicant's health, habits, and experiences.

true

When loaning money to a friend or family member, it is advisable to lend only the amount that you can afford to give away.

true

When the interest rate on savings is lower than the interest rate on a loan, it is less expensive to use savings to make a purchase.

true

A single-payment loan:

usually matures in one year or less.

Sales commissions and marketing expenses increase the costs of a fully loaded _____ policy.

whole life insurance

A liability suit could result against you when:

your dog bites the neighbor

Which of the following changes would tend to increase the premium on a disability policy?

​A shorter elimination period

Which homeowners' policy is best suited for a renter of an apartment?

​HO-4

The insurance designed to help with nursing home or in-home care due to chronic illness is called:

​long-term care.

Section II of the homeowner's insurance contract covers:

​the cost of defending the insured.