FINAL FINN 1003

The maximum coverage under most dental policies is often in the range of _____ per patient. $3,000 to $5,000 $1,500 to $2,500 $2,000 to $2,500 $1,500 to $2,000 $1,000 to $2,500

$1,000 to $2,500

Which of the following statements is true of medical insurance costs in the U.S.? Due to the financial importance of health insurance, nearly 50 percent of the U.S. population has health insurance. A poor demand-and-supply distribution of health care facilities and services has increased the health care costs. The average annual premium for the aging U.S. population has increased by about 20% from 1999 to 2015. Advances in medical technology have decreased the medical insurance costs. Increased regulation and decreased administrative costs have reduced the 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.

_____ can be both an advantage and a disadvantage of universal life insurance. Unbundling premiums High returns Underwriting Tax features Flexible premiums

Flexible premiums

Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability? Extended-term option Multiple indemnity clause Disability clause Guaranteed purchase option Paid-up insurance option

Guaranteed purchase option

Ben's (aged 40) health coverage charges a low ($15) deductible each time he visits a doctor or hospital. Other than the low per-service deductible, there is very little cost sharing. However, Ben has the advantages lack of deductibles, few or no exclusions, and not having to file insurance claims. Which of the following most likely provides Ben's health coverage? Fee-for-service indemnity plan Blue Cross/Blue Shield association Commercial insurer (major medical) Medicare HMO

HMO

Which of the following homeowners' policies is best suited to a renter of an apartment? HO-4 HO-1 HO-3 HO-8 HO-2

HO-4

Which of the following is true of the health care industry? In the fee-for-service plans, the health care provider is the same as the insurer. In a traditional indemnity plan, the premium cost is low if it is a high-deductible plan. In traditional indemnity plans, the government waives the doctor's fees or the hospital charges. A group health insurance is a contract between pharmaceutical companies and the health care provider. In managed care plans, employers contract with the health care service provider.

In a traditional indemnity plan, the premium cost is low if it is a high-deductible plan.

Which of the following is true of long-term care insurance? Long-term-care policies do not reimburse the insured for the cost of services incurred on a day-to-day basis. Most long-term-care insurance policies are non-renewable in nature. There is no waiting period to receive the benefits. The maximum duration of benefits is only one year. Many policies offer inflation protection riders for an additional premium.

Many policies offer inflation protection riders for an additional premium.

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 $1,000 Raising her medical payments coverage Raising her collision coverage by $10,000 Maintaining her collision coverage at current levels Maintaining her liability limits at current levels

Raising her deductible from $250 to $1,000

You can learn about the financial strength of an insurance company by checking ________________________________ rating system.

Standard & Poor's

Which of the following types of insurance policies provides temporary coverage for a set period? Variable life insurance policy Extended life insurance policy Whole life insurance policy Term life insurance policy Universal life insurance policy

Term life insurance policy

Which of the following statements is true of the Affordable Health Care Act (ACA)? The ACA requires employers to reimburse the cost of hospital stay of the insured. The ACA decides the insurance payments for dependents. The ACA limits the total number of surgeries for the insurers. The ACA provides major medical insurance with low deductibles to protect against catastrophic illnesses. The ACA eliminates lifetime limits on total health care insurance payments by insurers.

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

Which of the following is true of the multiple-of-earnings method? The multiple-of-earnings method considers the insured's financial obligations to compute the insurance premium amount. The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the net annual earnings of the insured by some selected number. The multiple-of-earnings method determines the amount of tax benefits available to the insured when the life insurance coverage is availed. The multiple-of-earnings method divides the gross annual earnings of the insured by the insurance coverage available to the insured to determine the amount of annual insurance premium. The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number.

The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number.

A higher home insurance cost may result from: fewer insurance claims from the area of the insured's residence. fewer captive insurance agents hired by the insurance company. a low credit score of the insured. the lack of a swimming pool at the insured's residence. a low crime rate in the area of the insured's residence.

a low credit score of the insured.

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

a managed care plan

An exclusive provider organization (EPO) is _____. a hybrid form of health maintenance organization (HMO) that reimburses members a specified percentage of the cost a managed care plan that reimburses members only when affiliated providers are used a prepaid hospital and medical expense plan that allows members to use nonaffiliated providers a hybrid form of health maintenance organization (HMO) that allows members to go outside the HMO network for care a managed care plan in which subscribers receive services from physicians practicing from their own offices

a managed care plan that reimburses members only when affiliated providers are used

Which of the following changes would tend to increase the premium on a disability policy? A shorter elimination period Mandatory disability insurance in which the employer pays the entire premium Use of "any occupation" definition of disability instead of "own occupation to which one is reasonably suited" Decreasing the payment period until age 65 to a maximum of 2 years Decreasing the benefit level to 50% from 66% of prior earnings

a shorter elimination period

The best way to buy automobile insurance is through

an insurance agent

A captive agent is: a claims adjustor who assesses the probability of law violations during an investigation. a federal insurance agent who can sell low-cost flood insurance coverage. an automobile insurance agent who insures only other insurance agents. an insurance agent who represents only one insurance company. an independent agent who can insure homeowners and tenants together for flood insurance.

an insurance agent who represents only one insurance company.

The principle of indemnity will prevent: a significant amount of loss control activity. a negligent third party from being held liable for damages if the injured party is insured. the act of one person from being imputed to another. an insurer from ever waiving its right to subrogation. an insured from collecting more than what he or she has lost.

an insured from collecting more than what he or she has lost.

Auto insurance is needed primarily: as a part of the homeowner's insurance requirements. to satisfy federal requirements for a lawful citizenship. to counter the effects of increasing fuel prices. as protection against potential liability claims. to finance automobile maintenance.

as protection against potential liability claims.

Some employers providing health insurance as an employee benefit offer only one plan and pay _____. the entire health care cost for employees the entire health care cost for dependents of employees either all or part of the health care insurance premiums the entire health care premium only for dependents of employees the entire cost of the additional insurance benefit desired by employees

either all or part of the health care insurance premium

Employers set up a salary reduction agreement with the employees if: employees need additional insurance benefits. employees do not look for ways to avoid exposure to health care loss before it occurs. employees pay health care costs due to lapse of insurance coverage. employees pay hospitalization charges for the pre-existing conditions. employees are injured on the job or become ill through work-related causes.

employees need additional insurance benefits.

Negligence occurs when someone: admits an error. is not insured. fails to act in a reasonable manner. is more than 18 years of age. fails to act as an insured.

fails to act in a reasonable manner.

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

false

Blue Cross provides hospital coverage and Blue Shield provides prescription pharmacy coverage. false true

false

Disability insurance is available only when someone is completely incapable of returning to work during his or her lifetime. false true

false

Earthquakes are covered under most homeowner's insurance policies. false true

false

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

false

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

false

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

false

Under the adjusted (modified) community rating approach to health insurance premium pricing, all policyholders in an area pay the same premium without regard to their personal health, age, gender, or other factors. false true

false

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

false

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

false

Families faced with the loss of a principal wage earner receive Social Security benefits _____. after the repayment of all the financial obligations of the principal wage earner that amount to 5 to 10 times the current income of the principal wage earner that are deducted from the insurance proceeds, for the purpose of tax calculation after paying additional taxes on the benefit amount from the government that are intended to provide basic, minimum support

from the government that are intended to provide basic, minimum support

During the past few decades, the percentage of our income spent on health care: has decreased due to increased regulation and decreased administrative costs. has increased due to an aging U.S. population. has decreased due to the reduction in the health care costs. has decreased due to costly advances in medical technology. has increased due to advanced demand-and-supply distribution of health care facilities.

has increased due to an aging U.S. population.

A(n) __________________ agent represents multiple insurance companies.

independent

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

industrial life

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

inpatient hospital services

The average age of the American population

is increasing

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

large

______________is any activity that lessens the severity of loss once it occurs.

loss control

The probability of a loss occurring can be reduced by_____. loss prevention insurance loss retention risk assumption risk observance

loss prevention

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? Medicare Medicaid Blue Cross/Blue Shield Workers' compensation Point-of-service (POS) plan

medicaid

A life insurance policy can be structured so that death benefits are paid directly to a(n) ______________________ , which means that creditors cannot claim the cash benefits from the life insurance policy.

named beneficiary

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

point-of-service (POS) plan

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. elimination period outer limit period internal limit period waiting period probationary period

probationary period

____________ 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 liability limits on their homeowner's and auto coverage

An insured individual's right to continue a health insurance policy if he or she chooses is known as: benefits duration co-payment. renewability. co-insurance. policy exclusion.

renewability

The insurance portion of a universal life policy is most analogous to: group insurance. variable insurance. whole life insurance. mortgage insurance. term insurance.

term insurance.

The Affordable Care Act (ACA) requires insurance companies to adhere to: the pure community rating approach for individuals and small businesses. the modified community rating approach for SEC registered corporations. the unadjusted community rating approach for SEC registered corporations. the adjusted community rating approach for individuals and small businesses. the cost-of-living adjustment (COLA) for individuals and small businesses.

the adjusted community rating approach for individuals and small businesses.

The underwriting function of insurance companies is designed to ensure that premiums are based on_____. the chance of losses the value of losses income levels expense levels the value of gains

the chance of losses

Replacement-cost coverage is the reimbursement of: the cost of repairing or replacing damaged structures without deducting physical depreciation. reasonable living expenses while the insured's house is being repaired. the cost of defending the insured. the cost of damages caused by perils other than those mentioned in the policy. the increase in the deductible to reduce the amount of the insurance premium.

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

When purchasing a long-term-care policy,

the guaranteed renewability provision is recommended.

In a traditional indemnity (fee-for-service) plan,: the health care provider contracts with the insured's employee union to provide health insurance benefits. the insurer always pays directly to the health care provider. the lower the deductible, the lower the premium. the insured receives comprehensive health care services from a designated group of doctors only. the health care provider and the insurer are separate.

the health care provider and the insurer are separate.

When insuring property, people need to consider not only replacing and restoring the actual property in the event of a loss, but also

the liability arising from the insured's responsibility for property loss

________________ represents the initial amount that's not covered by the policy and thus must be paid by the insured.

the premium

Employees should consider risk assumption for certain health risks because: they need not look for ways to avoid exposure to risks before they occur. they are required to pay health care costs when their insurance coverage lapses. these are covered by Social Security. they would rather pay small amounts from savings than higher premiums to cover them. they will eliminate some or all of the factors from their lifestyle and reduce their chances of becoming ill.

they would rather pay small amounts from savings than higher premiums to cover them.

A house with a replacement value of $110,000 is currently insured for $90,000. The house is damaged in a windstorm, causing a loss of $15,000. The insurance company will pay an amount equal to $15,000 less the deductible. true false

true

An individual's need for additional life insurance can be determined by looking at the difference between his or her family's available financial resources after his or her death and his or her family's total economic needs. true false

true

Generally, group insurance plans are more reasonably priced than individual policies. true false

true

Health Maintenance Organizations (HMOs) provide health care to participants without requiring them to file insurance claims. true false

true

Insurance policies provide the opportunity for claims arbitration to settle any disputed liability claims. true false

true

Living a healthy lifestyle is an example of loss prevention and control. true false

true

Millions of Americans are not covered by health insurance. true false

true

Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of the principal wage earner. true false

true

The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities. true false

true

The premiums for homeowners' insurance policies are based on the size of the deductible, any policy limits, and the standard coverage. true false

true

In order to qualify for disability insurance under Social Security, a person must be: unable to pay health insurance premium for more than 6 months. willing to undergo rehabilitation. ill for at least two years. unable to carry out the duties of any job. unable to carry out the duties of the current job.

unable to carry out the duties of any job.

Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage. loss control risk assumption underwriting the needs analysis method Social Security survivor's benefits

underwriting

Dependent children __________________________ will usually be covered by your health insurance policy.

up to a stated maximum age

The policy owner assumes the investment risk with a _________ insurance policy.

variable life

Sales commissions and marketing expenses can increase the costs of a fully loaded _____ policy. term life insurance whole life insurance variable life insurance mortgage life insurance universal life insurance

whole life insurance

Disability income insurance will provide income to a disabled or ill person ____________________

with a waiting period before income is received