Personal Finance Insurance Test Reveiw

Your renter's insurance policy costs $20/month and has a $1,000 deductible. A thief breaks into your apartment and steals your $800 TV set. How much would your insurance company pay?

$0

You cause an accident in which someone is injured. The case goes to trial and there is a verdict to compensate the injured person with $58,000. You have a $50,000 coverage limit per person for Bodily Injury. How much will you have to pay out-of-pocket?

$8,000

Your parents tell you on your 22nd birthdat, they would like for you to get your own health insurance. You are very healthy, are not taking any presciption medicines, and generally only see your doctor for your annual perscription medicines, and generally only see your doctor for you annual physical. What type of health insurance is likely to be best for you?

A high deductible plan with a low monthly payment

Bruce has just graduated from college and decides that instead of paying for insurance, he'll work on building up his emergency fund. This way, if something goes wrong, he can just pay for it using cash from his emergency fund. Why is this a bad idea?

An accident or illness can strike at any time and be quite expensive, so it is possible hed need a big sum of money well before his emergency fund was large enough

What should she have?

Auto health and renters insurnce

Which of the following statements is true about auto insurance premiums?

Auto insurance premiums can vary from company to company, therefore, it is important to comparison shop for the best price and coverage

Since doctors only accept specific health insurance plans, what should you do prior to selecting your own health insurance plan?

Check the list of doctors in the network

What term refers to an errangement where you are responsible for paying a percentage of covered medical expenses after your deductible is met?

Co-insurance

Insurance companies make money by...

Collecting more in premiums than they need to pay out each year

While parked on the street overnight, the passenger window in Sam's car was knocked out by someone trying to break in. Which type of auto insurance coverage will help cover the cost to get the window replaced?

Collision

While parket on the street overnight, the passenger window in Sams car was smashed by someone trying to break in. Which type of insurance coerage will help cover the cost to get the window replaced?

Comprehensive

Why would someone choose to get long term disability insurance even if they already have health insurance?

Health insurance only covers meical bills, while long term disability will help compensate for lost work with 40-60% of their income

What type of auto insurance are you required to carry in almost ecery state (49 out of 50)?

Insurance if you cause injury to another person

Rocco causes an auto accident on a residential street. He has liability coverage only he causes 7000 in damage to someone elses car. 2000 in damage to his own car, has a 500 decudtible and has a maximum coverage limit of 10000 how much will insurance pay toward fixing roccos car?

It wont pay anything towards his car because he only has liability. 7000 on another persons car

Renters Insurance

Least risky, without coverage still take risk She needs to look at her assets, if she has something high value with no coverage thats more debt If she does not have a lot of assets it is something she can put off Decision shye has to make after calculating price of personal property to see if she can afford to replace your stuff

Which of the following insurance coverage options would be the lowest priorty for a typical sing person 1-2 years out of college?

Life insurance

health insurance

No she should not, its reccomented Find herslef in medical emergance is more debt Serios health or medical condition makes it harder to get coverage or at premiums she can afford

Ronald is trying to pay down his student load debt as quickly as possible, so he decides not to purchase dental insurance and uses that moneu toward debt repatment instead. Ronald bites into something unexpectdly hard and breaks his took, cusing great pain. Can he enroll in dental insurance tomorrow and make a dentist appointment the folloring day? Why or why bot?

No, because it takes insurance 2-3 weeks to issue a policy

Give three examples of risk factors that could lead you to pay higher health insurance premiums

Only 5 leagally allowed Location Age Tobacco use Plan catagory weather plan covers dependants

Which person will probably have the least expensive health insurance payments?

Patty, age 26, who works as an admisistrative assistant at a marketing firm

Which of the following is the best allternative plan to purchasing cell phone insurance?

Put aside money that is equal to the monthly premium in a savings account, in case of phone repairs or replacements

Insurance companies operate by charging individualt different prices for coverage depending on their rist levels. Then, they collect everyones monthly premiums together and use the money to make payments when people file a clain (for example, someone is in an auto accident or needs to see a doctor) This concept is known as

Risk Pooling

Frank has an auto policy with a coverage limit of $30,000 and a deductible of $1,000. He gets into an accident and the damages to his car total $6,200. How much will Frank need to pay out-of-pocket?

S1,000

Your health insurance plan has a $20 copay for certain covered prescription medications. You arrive at the pharmacist and pick up your prescription (which is covered under your plan) which has a list price of $75. How much would you pay the pharmacy?

S20

Jasmine has rented the same apartment for 10 years, and she has bever had to use her renters insurance even once. She wats the polict as a result, because she feels like shes wasting money. Provide a counter-argument, telling Hasmine why that a bad idea

She could still have a loss Money she sames will cover th einsurance The ammount You pay in premiums will cover the ammmoint of a loss

Auto:

She has to meet minimem liability state requirementsOf she has a lein she has to have colission and comprehensice She ca carry high deductivle on collision and comprehensive Lein hodler can state how much deductibel is If she has no lead she has to cover liability

How do insurance companies decide how much to charge an individual for their monthly premiums?

The company assesses the individuals risk factors and assigns higher premiums to high risk individuals

Social Security generally provides insurance for which of the following groups of people?

The elderly or disabled

Why do insurance companies charge more if they belive you are a "high risk" costomer?

You are more likely to file more claims, which means its goign to pay more for you which meakes them lose money in the end

You have the option to enroll in your companys employer-sponsored health insurance. Whoch of the following statements will be ture if you choose to enroll?

You can make you monthly payment pre-tax, lowering the overall ammount of money you are taxed a year

Lucille just graduated college and is on a very tight budget, so she chooses a health insurance plan with a low monthyl premium and a high deductivel. She figures that if she gets seriously ill or injured, shell just change the plan before she heads to the doctor or hospital. Why wont her plan work?

You cannot change your plan instantly at any time, and she cannot predict when an emergency will strike

When setting your premium your car insurance company may consider each of the following except...

Your height

What is an insurance premium?

Your monthly payment to your insurer, regardless of whether you use any services

Which of these is not considered an "out-of-pocket" expense?

Your monthly premium