Money and Credit final questions

Patrick's monthly take-home pay is $5,000. His net worth is $125,000. He estimated that he would receive Social Security benefits worth $1,000 and company disability benefits $2,000 if he becomes disabled. The additional disability benefits that he needs to arrange for equals _____.

$2,000

Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, is the primary beneficiary, and their children, Mimi (age 24) and Ann (age 30), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distributed?

$200,000 to jack

Which of the following best describes a custodial care facility?

A custodial care facility is a place that provides assistance in the normal activities of daily living but not medical attention or supervision.

Which of the following is true of a licensed insurance agent?

A licensed insurance agent guides the insured in making financial decisions regarding insurance.

Which of the following is true of the evaluation of an insurance company by a rating agency?

A rating company evaluates the claims paying ability of the insurance company.

Which of the following is a basic, seldom-used homeowner's policy with very narrow coverage?

H0-1

Which of the following homeowners' policies provides coverage for damage caused by electrical current?

H0-2

In which of the following scenarios are the expenses on a long-term-care insurance the highest?

Linda is a 58-year-old uninsured woman who is the primary caregiver for her family.

A _____ is a hybrid form of health maintenance organization (HMO) that allows members to go outside of the HMO network for care.

POS

In order to predict the number of losses that will occur in a given time accurately, insurance companies must study

a large number of cases

Nonforfeiture rights guarantee that a policy owner will not lose his or her policy's _____.

cash value

If a term life insurance is convertible, the policy can be:

changed to a comparable whole life policy

A life insurance agent who takes her profession seriously is likely to have earned a professional certification like the

chartered life underwriter, chartered financial consultant, certified financial planner

An insurance company:

collects premiums and provides insurance coverage

Insurance is a tool that can reduce one's _____ risk.

economic through strategies such as, loss control/prevention & risk assumption/avoidance

Activities of daily living (ADLs) are important in determining the _____ for long-term-care insurance.

eligibility

The life insurance needs of beneficiaries are secondary since most proceeds are paid to policyholders.

false

Premiums for workers' compensation insurance are paid by the employees.

false, employees bear nearly entire cost

Risk avoidance involves asking an insurance company to take over the risk for a small payment (the premium).

false, involves avoiding the act that creates it

Underwriters can predict whether or not you will suffer a loss this year.

false, they design rate classification schedules so people pay premiums that reflect their chances of loss

One drawback of long-term-care insurance is its:

high annual premiums such as 5-7%

Medicare is a government-sponsored health care plan composed of Part A and Part B. Part B covers

imaging, lab tests, prosthetic devices

______ insurance is a type of insurance that is issued in policies with small face amounts, often $1,000 or less.

industrial life

Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80 percent of the amount that it would cost to build them today, ____________can cause the actual amount of coverage to fall below 80 percent.

inflation

When you purchase an insurance policy, you are effectively transferring your risk of loss to the?

insurance company

The first step in buying property and liability insurance is to develop a(n)

inventory of exposures to loss then arrange them from highest to lowest priority

An individual receiving health care:

is allowed to receive multiple payments from more than one insurance company for this care. coordination of benefits

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

limited payment whole life

Robert's health maintenance organization (HMO) regularly sponsors classes on nutrition, prenatal care, and other health-related topics. Robert's health maintenance organization is engaged in encouraging a healthy lifestyle, which is an example of

loss prevention

A higher home insurance cost may result from:

low credit score of the insured

is a health care plan that emphasizes cost control and preventive treatment.

managed care plan

Which of the following is a public assistance program that provides health insurance benefits only to those who are unable to pay for health care?

medicaid

A _____ increases the face amount of a policy if the insured dies in an accident.

multiple indemnity clause

For determining how much life insurance you require, a more detailed approach is provided by the:

needs analysis method

_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.

needs analysis method

While performing needs analysis for determining life insurance coverage, if available resources are greater than anticipated needs, then

no additional life insurance is required

what is a characteristic of a universal life insurance policy?

no choice in how accumulation account is invested

Underwriters design rate classification schedules so that the insureds?

pay premiums that reflect their chance of loss

A homeowner's policy does not provide protection for:

personal property of tenants, unless a landlord be proven negligent

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 community rating approach to health insurance premium pricing

prohibits insurance companies from varying rates based on health status or claim history

Donna, who is single and 30 years old, 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 1000

One of the key goals of the Affordable Health Care Act of 2010 is:

reduce # of uninsured citizens and reduce increases in healthcare costs

A _________covers the cost of visits to a doctor's office or for a doctor's hospital visits, including consultation with a specialist.

regular medical expense insurance

To purchase a personal liability umbrella policy, the insured party must already have

relatively high limited liability on home and auto coverage

Recently, your puppy chewed up your shoes and you had to go buy another pair. This is an example of:

risk assumption, effective way to handle small exposures to loss when insurance is too expensive

insurance companies use actuarial data to measure?

risk of loss for a given population and to estimate the risk frequency

For most families, money from _____ makes up the largest non-life insurance financial resource.

savings, investments, and Social Security survivor's benefits

Life insurance coverage is required the most by:

single adult with an uncle to support

When trying to determine your disability income needs, you should consider your available disability benefits from employers, income needs, and:

social security benefits

Which of the following will help assess your family's total economic needs to estimate the amount of insurance coverage required?

special requirements of dependents

A(n) _____ policy is a type of term insurance.

straight term

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

the adjusted community rating approach for small businesses and individuals

Insurance companies use underwriting to determine:

the applicable premiums they will charge from the potential insured

which of the following is an advantage of universal life insurance?

the death protection proportion and the savings portion are separately identifiable

Which of the following is an example of risk assumption?

the employee chooses a plan that covers some health risks with deductibles and waiting periods

Of the various types of whole life insurance policies available, continuous premium/straight life offers:

the greatest amount of permanent death protection and the least amount of savings per premium dollar.

When purchasing a long-term-care policy,

the guaranteed renewability provision is recommended

under group life insurance

the insurance is a term insurance with the option to convert to individual whole life policies

Susan and Mike have been married for four years. Their life insurance requirements depend on

their earning potential and assets they want to protect.

If policyholders terminate their whole life insurance policies, then:

they can claim the amount accumulated so far

The primary purpose of life insurance is to protect family members of the insured from financial loss in the event of his or her untimely death.

true

You would have a better chance of choosing your own doctor with a preferred provider organizations (PPO) plan than with a health maintenance organizations (HMO) plan.

true

Millions of Americans are not covered by health insurance.

true, over 10% of population doesn't have health insurance

Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage.

underwriting

It can be difficult to evaluate the true cost of a _____ at the time of purchase

universal life insurance

The death benefit of a(n) _____ life insurance policy may go down because of poor investment returns.

variable

Which of the following insurance policies allows the insured to decide how the cash value of the insurance will be invested?

variable life insurance

Which of the following statements is true of a health reimbursement account (HRA)

when the HRA balance is used up the insured must pay the remaining deductible of the health insurance policy before insurance begins to pay

Professional designations, such as Chartered Life Underwriter (CLU) and Certified Financial Planner (CFP), are awarded to those insurance agents:

who meet experience requirements and pass comprehensive examinations in related fields.