PMM TEST 2
The primary purpose of life insurance is to provide:
financial security for your dependents after your death.
Standard homeowner's policies will not include coverage for damage done by:
flood.
Most lenders immediately will _____ the first time that you have difficulty meeting your loan payments.
grant an extension
Medicare Part B covers:
imaging, laboratory tests, and prosthetic devices.
A(n) _____ agent represents multiple insurance companies.
independent
The decision about whether or not to grant you credit will be made by:
individual creditors.
Medicare Part A provides:
inpatient hospital services.
A(n) _____ loan is repaid in a series of fixed, scheduled payments rather than in a lump sum.
installment
A captive agent is a(n):
insurance agent who represents only one insurance company.
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 policy.
limited payment whole life
If you are laid off, your group health insurance:
must be continued if you pay the premiums.
The _____ method is a detailed method of determining the amount of life insurance coverage needed for an individual.
needs analysis
To establish credit, you should first:
open checking and savings accounts.
Any credit card purchase will effectively be an interest-free loan if you have a zero balance when the grace period begins and you:
pay off the entire balance on or before the due date.
Insurance companies make profit by:
paying out less than the sum of the premiums and the earnings on them.
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 coordination of benefits provision in a health insurance policy _____ by collecting benefits from more than one policy.
prohibits collecting more than 100% of covered charges
A personal liability umbrella policy:
provides added liability coverage for homeowner's and automobile insurance.
The personal property floater (PPF):
provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy.
The _____ is commonly used on revolving credit lines by commercial banks, savings and loan associations (S&Ls), and credit unions.
simple interest method
If you are expecting difficulties in making your payments, it is recommended that you:
talk to the creditors.
Replacement-cost coverage is the reimbursement of:
the cost of repairing or replacing damaged structures without deducting for depreciation.
Long-term care is a term used to describe:
the delivery of medical and personal care to persons with chronic medical conditions who are not in a hospital.
Insurance companies use _____ to determine whom they will insure and what they will charge for insurance coverage.
underwriting
The rate of interest charged on _____ loans changes periodically in keeping with prevailing market conditions.
variable-rate
Which of the following statements regarding fixed-rate loans is true?
Fixed-rate loans are preferable if interest rates are expected to rise.
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
Which of the following statements regarding term life insurance is true?
Term life usually offers lower initial premiums than other types of insurance.
Which of the following statements regarding a consumer loan is true?
A consumer loan is used mainly to borrow money to pay for big-ticket items.
_____ is a health care plan in which subscribers/users contract with the provider organization, which uses a designated group of providers meeting specific selection standards to furnish health care services for a monthly fee.
A managed care plan
Which of the following is the best way to build a strong credit history?
Consistently make payments on time
Which of the following sources of consumer loans often has the most favorable terms for borrowers?
Credit unions
Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability?
Guaranteed purchase option (GPO)
_____ is the choice to accept and bear the risk of loss.
Risk assumption
Which of the following statements regarding risk avoidance is true?
Risk avoidance is any activity that helps evade an act that creates a risk.
Universal life insurance is:
a combined savings/investment plan and insurance policy.
If a borrower has a high FICO score, then there is:
a high chance that a lower interest rate will be charged for his or her loan.
A proper use of open account credit would be to buy:
a washing machine.
An improper use of extended credit is buying:
an expensive dinner.
Auto insurance is needed primarily:
as protection against the cost of significant loss.
The preferred technique for determining how much life insurance coverage is needed for an individual is to:
assess the family's total economic needs and subtracting the financial resources that would be available after death to meet those needs.
If a term life insurance policy is convertible, it can be:
changed to a comparable whole life policy in the future.
Mason Corporation borrows funds for the expansion of its business. The loan is secured with the office building. Therefore, the office building serves as _____ for the loan.
collateral
A _____ loan is intended to help consumers who have an unhealthy credit situation caused by overusing their credit.
consolidation
Comprehensive automobile coverage refers to:
coverage for damage to an insured automobile from perils (with a few exceptions) other than collision.
A(n) _____ is a type of reporting agency that collects and sells credit information about individual borrowers.
credit bureau
An increase in the amount of the deductible will:
decrease the amount of insurance premiums.
The _____ represents the initial amount that's not covered by a health insurance policy and thus must be paid by the insured.
deductible
Activities of daily living (ADLs) are important in determining _____ for long-term-care insurance.
eligibility
Negligence occurs when someone:
fails to act in a reasonable manner.