PERSONAL FINANCE FINAL
A(n) _____________ agent represents multiple insurance companies
9independent
An increase in the amount of the deductible will _______________________.
Decrease the amount of the premiums
T/F: All group insurance plans extend health insurance benefits to retirees.
False
T/F: Disability insurance is available only when someone is completely incapable of returning to work during his or her lifetime.
False
T/F: Homeowner's co-insurance requires the insured to carry insurance protection qual to the market value of the house
False
T/F: Large employers are less likely to offer health insurance to their employees than small employers.
False
T/F: 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
A good health insurance plan embodies more than financing medical expenses, lost income, replacement services; it incorporates: -means of risk reduction such as risk avoidance -lifetime limited dollar insurance coverage on pre-existing conditions -flexibility in insurance premium payment on the lapse of the insurance policy -Social Security benefits
Means of risk reduction such as risk avoidance
_____ involves abstaining from any activity that will affect an individual financially. Premium collection Loss control Risk avoidance Loss prevention Risk assumption
Risk avoidance
A coordination of benefits provision in a health care policy _________________________ by collecting benefits in multiple payments for health care. allows the collection of only 75 percent of covered charges allows the collection of only 50 percent of covered charges prohibits collecting more than 80 percent of covered charges prohibits collecting more than 100 percent of covered charges
prohibits collecting more than 100 percent of covered charges
The community rating approach to health insurance premium pricing _____. -prohibits insurance companies from varying rates based on health status or claims history -offers consumer directed health plans that go one step beyond a flexible-benefit plan -favors the government's contribution to the health savings account (HSA) -advocates offering Social Security Medicare program to all individuals irrespective of their age -considers only medical insurance coverage from a private insurance company
prohibits insurance companies from varying rates based on health status or claims history
___________ is the choice to accept and bear the risk of loss.
risk assumption
The purchase of insurance is a common form of _____ by the insured. loss control loss prevention risk transfer risk assumption risk avoidance
risk transfer
a form of term insurance in which the benefits that will be paid to the beneficiary are reduced over time and the premium remains constant
decreasing term insurance
________________ insurance will provide income to a disabled or ill person with a waiting period before income is received
disability income
term life insurance with generally lower than typical premiums
group life insurance
During the past few decades, the percentage of our income spent on health care: has decreased due to the reduction in the health care costs. has decreased due to increased regulation and decreased administrative costs. has increased due to an aging U.S. population. 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 US population
One drawback of long-term-care insurance is its: -non-renewability clause.. -high annual premiums. -overlap with Medicare. -short duration.. -inability to cover custodial care.
high annual premiums
Medicare is a government-sponsored health care plan composed of Part A and Part B. Part B covers post-hospital medical services imaging, laboratory tests, and prosthetic devices therapy, rehabilitation, and home health care inpatient hospital services
imaging, laboratory tests, and prosthetic devices
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. limited payment whole life convertible whole life renewable premium whole life single premium whole life continuous premium whole life
limited payment whole life
The insurance designed to help with nursing home or in-home care due to chronic illness is called: major medical plan. long-term care. comprehensive major medical plan. nursing home care. Medicare.
long-term care
The death benefit of a(n) _____ life insurance policy may go down because of poor investment returns. variable industrial limited payment whole group
variable
The policy owner assumes the investment risk with a ______________ insurance policy.
variable life
It pays to comparison shop for insurance policies because of the __________________________.
large variations in premiums and services
Michael's estimated current monthly take-home pay is $4,500. His total existing monthly benefits is $2,950. Michael's estimated monthly disability benefits is _____. $4,500 $1,550 $7,450 $2,950 $550
$1,550
Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, is the primary beneficiary, and their children, Mimi (age 24) and Ann (age 30), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distributed? $66,666 each to Jack, Mimi, and Ann $100,000 each to Mimi and Ann $150,000 to Jack and $25,000 each to Mimi and Ann $100,000 to Jack and $50,000 each to Mimi and Ann $200,000 to Jack
$200,000 to Jack
A $100,000/$300,000 bodily injury liability automobile policy could pay up to a total of ___________ to all injured victims in one accident.
$300,000
Which of the following statements is true of medical insurance costs in the U.S.? -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. -A poor demand-and-supply distribution of health care facilities and services has increased the health care costs. -Increased regulation and decreased administrative costs have reduced the 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
Which of the following represents a disadvantage of a whole life insurance policy? A whole life insurance policy may require a policyholder to pay higher premiums when the policy is renewed. A whole life insurance policy provides only temporary coverage for a set period. A whole life insurance policy does not provide any tax advantages on accumulated earnings. It is difficult to evaluate the true cost of a whole life insurance policy at the time of purchase. A whole life insurance policy often provides lower yields than other investment vehicles.
A whole life insurance policy often provides lower yields than other investment vehicles
Elements of the _____________________ Act: Individual mandate Coverage of young adult and pre-existing health conditions Health care insurance exchanges Small-firm coverage of employees
Affordable Health Care Act
T/F: Millions of Americans are not covered by health insurance.
True
T/F: Never discuss liability at the scene of an accident, or with anyone other than the police and the insurance company.
True
_____ and _____ are both relatively expensive types of decreasing term life insurance. Special-purpose policies; group life Credit life; mortgage life Group life; credit life Mortgage life; industrial life Industrial life; special-purpose policies
Credit life; mortgage life
A life insurance agent who takes her profession seriously is likely to have earned a professional certification like the: Certified Insurance Agent Chartered Financial Analyst Chartered Financial Advisor Chartered Life Underwriter
Chartered Life Underwriter
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? Medicare Commercial insurer (major medical) Blue Cross/Blue Shield association HMO Fee-for-service indemnity plan
HMO
Which of the following homeowners' policies provides coverage for the damage caused by the accidental discharge of water or steam? HO-9 HO-8 HO-2 HO-7
HO-2
__________ method determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.
Needs analysis method
Which of the following is a characteristic of a universal life insurance policy? Lighter fees than other insurance policies No choice in how the accumulation account is invested No flexible premiums Absence of a savings feature Fixed premiums and protection levels
No choice in how the accumulation account is invested
_________ clause allows you to receive the savings you accumulated if you terminate your whole life policy
Nonforfeiture clause
Donna, who is single and 30-years-old, has received several speeding tickets recently and was shocked by the effect of her auto insurance. Donna drives a 2002 Pontiac Firebird, 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 be advisable? Maintaining her liability limits at current levels Raising her medical payments coverage Raising her deductible from $250 to $1,000 Raising her collision coverage by $10,000 Maintaining her collision coverage at current levels
Raising her deductible from $250 to $1,000
T/F: Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of the principal wage earner.
True
T/F: Suppose you carelessly, but unintentionally, knocked someone down a flight of stairs in your home. You would be covered by your homeowner's insurance.
True
T/F: The premiums for homeowners insurance policies are based on the size of the deductible, any policy limits, and the standard coverage
True
T/F: Underwriters can predict whether or not you will suffer a loss this year.
True
T/F: insurance policies provide the opportunity for claims arbitration to settle any disputed liability claims
True
Insurance underwriting is best described as: -a set of activities used to identify the risk and rewards of investing an insured's funds on marketable securities. -a function most often performed by an actuary. -the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums. -a process of developing taxing structures for insurance policies. -production-related activities performed primarily by agents on the field.
The process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.
Replacement cost coverage is the reimbursement of: The cost of repairing or replacing damaged structures without deducting physical depreciation The cost of defending the insured The cost of damages caused by the perils other than those mentioned in the policy Reasonable living expenses while the insured's house is being replaced
The cost of repairing or replacing damaged structures without deducting physical depreciation
An insured does not get the right to arbitration when: The insured leaves the scene of the accident The loss of a relatively small value The insured has made several claims from the insurance company The claim is assigned to a claims adjustor The Insurance company denies responsibility for the loss
The insurance company denies responsibility for the less
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 They reimburse a higher amount of claims Their insurance agents review the loss claims and file a lawsuit against the negligent party They hire only certified insurance counselors as their captive agents.
Their premiums are lower than for companies that sell insurance through agents
Auto insurance is needed primarily: to counter the effects of fuel prices as protection against liability claims as a part of the homeowners insurance requirements to finance automobiles maintenance to satisfy federal requirements for citizenship
as protection against liability claims
a method that determines how much life insurance is needed based on the household's future expected expenses
budget method
The first step in buying property and liability insurance is to develop a(n) _____________________.
inventory of exposures to loss
Coverage for basic hospitalization, surgical, and physician expense and major medical protection is combined into a single policy
comprehensive major medical insurance
Even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their homes insured for at least 80 percent of the amount that it would cost to build them today, ______ can cause the actual amount of coverage to fall below 80 percent.
inflation
life insurance that pays off a mortgage in the event of the policyholder's death
mortgage life insurance
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 personal liability umbrella policy is more likely to be opted for by _________________.
people with high incomes and high net worth
an extension of the homeowner's insurance policy that allows you to itemize your valuables
personal property floater
A(n) _____ policy is a type of term insurance. increasing term straight term whole life variable term risk assumption
straight term
Which of the following statements is true of the Affordable Health Care Act (ACA)? The ACA eliminates lifetime limits on total health care insurance payments by insurers. The ACA provides major medical insurance with low deductibles to protect against catastrophic illnesses. The ACA limits the total number of surgeries for the insurers. The ACA requires employers to reimburse the cost of hospital stay of the insured. The ACA decides the insurance payments for dependents.
the ACA eliminates lifetime limits on total health care insurance payments provided by insurers.
Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage.
underwriting
The Affordable Care Act (ACA) requires insurance companies to adhere to: the pure community rating approach for individuals and small businesses. the cost-of-living adjustment (COLA) for individuals and small businesses. the unadjusted community rating approach for SEC registered corporations. the adjusted community rating approach for individuals and small businesses. the modified community rating approach for SEC registered corporations.
the adjusted community rating approach for individuals and small businesses
Section II of the homeowner's insurance contract covers: the house and its contents the dwelling, accompanying structure, and personal property of the insured contractual wrongdoing the cost of defending the insured
the cost of defending the insured
Section I of the homeowner's insurance policy covers: the liability for negligence of the insured the cost of defending the insured the dwelling, accompanying structure, and personal property of the insured hospitalization costs provided to the insured the reasonable expenses incurred by an insured in helping the insurance company's defense
the dwelling, accompanying structure, and personal property of the insured
While performing needs analysis, when determining the available resources to offset the economic needs, you would generally ignore: the earning potential of the surviving spouse. the educational qualification of the children. the employer-provided group life insurance. savings corpus. Social Security benefits.
the educational qualification of the children.
life insurance that provides insurance over a specified term and accumulates savings for the policy holder over this time. Some flexibility on premiums.
universal life insurance
In a traditional indemnity (fee-for-service) plan,: The insured receives comprehensive health care services from a designated group of doctors only. The health care provider and the insurer are separate. The lower the deductible, the lower the premium. The insurer always pays directly to the health care provider. The health care provider contracts with the insured's employee union to provide health insurance benefits.
the health care provider and the insurer are separate.
People under the age of 65 years are covered by Medicare health insurance plan if: they agree to pay a negotiated fee for medical services. they receive monthly Social Security disability benefits. they have been denied health insurance because of a pre-existing condition. they volunteer to pay premiums. they are injured on the job or become ill through work-related causes.
they receive monthly social security disability benefits
By _____________ insurance companies decide who will be insured by them.
underwriting