Personal Finance Chapter 6 Review

Patrick has been named as the beneficiary for his Dad's life insurance policy. What does that mean?

he will receive the proceeds of the policy when his Dad dies.

Max has made a list of all the items that he owns, carefully writing down the serial numbers for all of his electronics, and taking pictures of the items in event of a burglary or a fire. What has he complied?

home inventory

Which of the items would be real property?

house

A(n) __ is an amount you must pay toward your medical expenses before your insurance begins to pay.

deductible

Connor injured his back while hunting, and needs to have back surgery. He won't be able to work for six months. Why type of insurance would help pay for his lost wages?

disability insurance

Jamel's dog was running over to the neighbor's yard to play with the neighbor's dog. Before Jamel's dog could play with the other dog, she stopped to say hi and receive attention from the neighbor's daughter. The daughter became excited and stepped backwards and hurt her ankle. Due the excitement from Jamel's dog, the little girl fractured her ankle. What insurance policy will cover the neighbor's daughter's medical bills?

dog owners liability - home owners insurance

A home inventory is a list of all the items in your home.

false

Automobile liability insurance pays for damages to your vehicle when you are at fault.

false

Which of the following would not be covered by a regular homeowner's insurance policy?

flood damage

Oscar rents an apartment a few blocks for the college campus he attends. One day when he is at class, someone breaks into his apartment and steals his laptop computer. What insurance coverage would pay for the laptop computer?

renter's insurance

Albert rents an apartment a few blocks for the college campus he attends. One day when he is at class, someone breaks into his apartment and steals his laptop computer. What insurance coverage would pay for the laptop computer?

renters

What did Max complete when he identified his risks?

risk assessment

Kye is worried that he does not have enough liability coverage. What could he add to his policy to give him more protection?

umbrella coverage

Jessica was in a car accident. The person who hit her didn't have car insurance. What type of insurance would cover the damage to Jessica's car?

uninsured coverage

Which of the following would be covered under the "criminal activity" clause of a homeowner's insurance policy?

vandalism

Alex's health care plan is based on the idea that preventive services will minimize future medical problems, but is restricted by the limited choices of doctors. The plan provides prepaid medical services for its members and must have a referral to see a specialist. What type of health care plan does he have?

HMO

What is the purpose of a home inventory list?

It provides insurance companies with information for reinbursement in event of a fire.

What is the purpose of financial responsibility laws?

It requires drivers to be prepared to pay for damages caused to others.

Claudia's health care plan allows her to choice her health care provider from a list of network of independent providers. She must pay a copay every time she uses a medical service. What type of health care plan does she have?

PPO

Victoria's health care plan allows her to choice her health care provider from a list of network of independent providers. She must pay a co-pay every time she uses a medical service. What type of health care plan does she have?

PPO

Leilani's flexible spending account (FSA) will allow her to pay for medical expenses with pretax money. What is one drawback of this type of account?

She will have to forfeit any money not used at year's end.

Which of the following would not be covered by renter's insurance policy?

a 4-carat diamond ring

Which of the following items is considered personal property in a rental property (ex.: apartment).

bedding

Lightning strikes the roof of your mustang convertible car and starts it on fire. Your car is a total loss. What insurance coverage would pay for your car?

comprehensive coverage

Marcus parked his car on the street. The next morning he found that a tree branch had fallen from an overnight storm and broken his windshield. What insurance would cover this damage?

comprehensive coverage

Johnny parked his car on a back street and walked to the bank. When he returned to his vehicle, the entire side of the car had been keyed. Someone had vandalized his vehicle. What insurance coverage would pay for the damages?

comprehensive-auto insurance

Returning home one evening Ryan momentarily lost concentration. When he looked back to the road, he could not avoid hitting a deer crossing the road and damaged his vehicle. What type of insurance coverage would pay for the damage to his vehicle?

comprehensive-auto insurance

The garage where you store your vintage car starts on fire. What insurance coverage would pay for the damages to your car?

comprehensive-auto insurance

Mason was driving on the street in front of his house. He stopped at the stop sign at the intersection before his house. The car behind him rear-ended him causing him to be pushed into the intersection, which caused him to collide with an oncoming car. Mason's car received substantial damage. The state that Mason lives in has no-fault insurance laws. What is the basic idea behind "no-fault insurance" law?

it prevents long legal battles to determine fault

Amanda was driving to the mall talking on her cell phone. Since she was distracted, she hadn't noticed that the stoplight changed, and that the car in front of her stopped. Amanda crashed into the back of the car. The driver of the other car had to be taken to the hospital. What coverage would pay for the injuries of the driver of the other car?

liability coverage

Chase was driving on a county road. His tire blew out on his truck causing him to collide with a mailbox. What coverage would pay for the replacement of the mailbox?

liability coverage

The snow was coming down heavily and the roads were becoming icy. As Rebecca came around the corner, her car went into a skid and came to rest in someone's yard. The car went through a line of lilac bunches ripping several of the bushes out and leaving deep tire gouges in the lawn before it stopped. What coverage would pay for the replacement of the lilac and the damage to the yard?

liability-auto insurance

Kara's husband has died unexpectedly. She is left with a teenager, a college student and a toddler to take care of, a mortgage payment, and a car payment. She is very grateful that her husband, Andrew and her planned for the future. What type of insurance would have they purchased to ease the financial burden of caring for the children and paying bills?

life insurance

Mason was driving on the street in front of his house. He stopped at the stop sign at the intersection before his house. The car behind him rear-ended him causing him to be pushed into the intersection, which caused him to collide with an oncoming car. Mason's car received substantial damage. The state that Mason lives in has no-fault insurance laws. Under the no-fault insurance laws, who will initially pay for the damage to Mason's car until fault can be determined in the accident?

masons insurance company will pay for the damages

_____ is government-sponsored health insurance for people age 65 or older that is run by the Social Security Administration.

medicare

Cassandra and her friends were talking and laughing while driving back to school from lunch. When the car in front of Cassandra stopped, she did not notice and ran into the back of the car. A passenger in Cassandra's car was injured when she hit the windshield. What coverage would pay for the injuries to the passenger?

personal injury protection

Elizabeth owns a home that has many large trees on the property there are lots of children in the neighborhood that play on everyone's property. One day, three of the neighborhood children were playing in her trees and one of the boys fall from the tree and breaks his arm. Which provision of Elizabeth's homeowner's insurance will pay for the child's medical treatment?

personal liability

Max pays a yearly fee for his renter's insurance? What is this fee called?

premium

Angela has decided to drop the insurance on her cell phone. She plans to save the $10 monthly premium in a savings account for any possible issues with her cell phone. What risk strategy did Angela apply when she dropped her cell phone insurance and started saving the money?

risk assumption

Maria enjoys playing hockey. She has broken her collar bone and had several concussions. She has decided that the risks of playing hockey outweigh the enjoyment of the sport so she is no longer playing hockey. What type of risk management has Maria implemented?

risk avoidance

Edward has just purchased his first house, and is installing fire extinguishers in his home. What type of risk management is Edward applying?

risk reduction

Buying insurance is an example of which risk strategy?

risk transfer

A driver's age and driving record impact the price they pay for auto insurance.

true

A rider to a homeowner 's policy covers a specific expensive item.

true

Hurricanes are covered under a normal homeowner's insurance policy?

true

Adam works with a contractor. He was on a job site shingling a house when the nail gun discharged accidentally sending a nail into his hand. He had to have surgery to remove the nail. He won't be able to work for 6 to 8 weeks. What type of insurance will provide his pay for his medical expenses?

workers compensation insurance

Risks to consumers come in many different forms. It is not possible to avoid all risks all the time. Which of the following ways would best help you manage risks?

you should avoid risks when possible and transfer high liability risks by purchasing insurance.