pfin test 2 ch 6-10
It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years.
25
A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:
31 days
Homeowners are eligible for reimbursement on a full replacement-cost basis only if they keep their homes insured for at least __________ of the amount that it would cost to build them today.
80 percent
When the simple interest method is used to determine finance charges, the interest is calculated based on the:
actual balance on the loan
An insurance company assigns more complex loss cases to a __________.
claims adjustor
Which of the following is true of a consumer loan?
consumer loan is used to finance the purchase of goods that are far too expensive
Negligence occurs when someone:
fails to act in a reasonable manner
If your debt safety ratio works out to 10%, you are relying too heavily on credit.
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
The primary purpose of life insurance is to provide:
financial security for dependents in the event of death
The primary purpose of a life insurance plan is to help:
in the protection of the dependents of the insured from financial loss in the event of his or her untimely death
A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed _____.
industrial life insurance
A single-payment loan used to finance a purchase when the cash to be used for repayment is known to be forthcoming in the near future is a form of _____.
interim financing
The average age of the American population ___________.
is increasing
Which of the following is true of the health care industry?
it is a traditional indemnity plan, the premium cost is low if it is a high deductible plan
A legal claim that allows lenders to liquidate loan collateral, in case the borrower defaults, is called a ____________.
lein
The basic purpose of insurance is to _____.
protect yourself form economic losses
Borrowing from ____________ is seldom recommended by financial advisors.
relatives
The insurance portion of a universal life policy is most analogous to:
term insurance
Retail charge cards are advantageous to merchants because:
they help build consumer loyalty
Never discuss liability at the scene of an accident, or with anyone other than the police and the insurance company.
true
Paying a loan ahead of schedule is one way to build a good credit history.
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
Clare's annual gross salary is $36,000, and her after-tax income is $28,800. What is Clare's maximum recommended monthly consumer credit payment?
$480
Loan repayment under the Parent Loans for Undergraduate Students (PLUS) program normally begins within ____________ of loan disbursement.
60 days
The __________ is a good homeowner's policy for a condominium owner.
HO-6
A straight bankruptcy _____.
allows a debtor to retain some other personal assets as per federal regulations
A credit scoring system might assign points according to your age and ____________.
annual income
A supplementary medical insurance (SMI) provides health care protection beyond the basic hospital coverage for:
anyone 65 and older who pays premiums on a regular basis
_____ is a benefit of using credit cards.
being able to meet a financial emergency
Nonforfeiture rights guarantee that a policy owner will not lose his or her policy's _____.
cash value
Straight bankruptcy is allowed under ____________ of the bankruptcy code.
chapter 7
Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy, he will receive the cash value. His plan is a _____ policy.
continuous whole life
Comprehensive automobile coverage refers to:
coverage for damage to an insured automobile from perils other than collision
A(n) _____ is an agency that provides credit information about individual borrowers to lenders.
credit bureau
Which of the following sources of consumer loans often has the most favorable terms for borrowers?
credit unions
A captive agent typically represents two to ten different insurance companies.
false
Blue Cross provides hospital coverage and Blue Shield provides prescription pharmacy coverage.
false
Fixed-rate loans are desirable if interest rates are expected to fall over the course of the loan.
false
Home equity loans are similar to home equity credit lines as they are also not secured with any collateral.
false
Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.
false
If an insured has a high-risk hobby, then he or she should expect to pay less for life insurance.
false
Large employers are less likely to offer health insurance to their employees than small employers.
false
Medicare and Medicaid are administered by hospitals and physicians.
false
Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance.
false
The debt safety ratio indicates the total assets owned by an individual.
false
The life insurance needs of beneficiaries are secondary since most proceeds are paid to policyholders.
false
During the past few decades, the percentage of our income spent on health care:
has increased due to an aging U.S. population
A(n) __________ agent represents multiple insurance companies.
independent
To qualify for a subsidized Stafford loan, you must:
make satisfactory academic progress
Anna uses her credit card regularly, but she pays off her total outstanding balance monthly. Anna should look for a credit card with:
no annual fees
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
A personal liability umbrella policy is designed to __________.
supplement homeowner's insurance coverage
Which of the following types of insurance policies provides temporary coverage for a set period?
term life insurance
The Affordable Care Act (ACA) requires insurance companies to adhere to:
the adjusted community rating approach for individuals and small businesses
Section II of a homeowner's insurance contract covers:
the cost of defending the insured
Replacement-cost coverage is the reimbursement of:
the cost or repairing of replacing damaged structures without deducting physical depreciation
Long-term care is a term used to describe _____.
the delivery of medical care to persons with chronic medical conditions in a nursing home
In the pure community rating approach to health insurance premium pricing, all policyholders in an area pay:
the same premium without regard to health, age, gender
Which of the following is true of companies that sell insurance directly to consumers?
their premiums are lower than for companies that sell insurance through agents
Commercial banks are able to charge lower interest rates than other lending institutions because:
they usually take only the best credit risks
A credit report is routinely used to predict creditworthiness.
true
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
A preferred provider organization has characteristics of both an individual practice association (IPA) and an indemnity plan.
true
Arranging for and fully repaying a small loan helps improve creditworthiness.
true
Debit cards are very convenient to use as they work like writing a check.
true
People who let their credit balances build up are mortgaging their future.
true
Rebates are always more cost effective than the 0 percent annual percentage rate (APR) loans offered on automobile loans.
true
Risk avoidance is attractive when the cost of avoidance is less than the cost of handling it some other way.
true
The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities.
true
In order to qualify for disability insurance under Social Security, a person must be:
unable to carry out the duties of any job
Dependent children ___________ will usually be covered by your health insurance policy.
up to a stated maximum age
A single-payment loan:
usually matures in one year or less
The finance charges on two credit cards with the same stated annual percentage rate (APR):
will be determined by the methods used to calculate balances
Sheldon has a home valued at $108,000 with an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of the market value of his home, how much can Sheldon borrow using a home equity loan?
$16,400
