FINANCE FINAL EXAM PART 2
All of the following are acceptable types of documentation for a household inventory except
A listing of items and their details in your memory.
An individual who purchases an insurance policy is called
A policyholder.
Mildred was diagnosed with terminal cancer and knows that she doesn't have long to live. Which of the following riders would allow her to receive cash now?
Accelerated benefits
Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?
Accidental death benefit
Molly is thinking about buying a type of whole life insurance policy, but she is not sure about how much she will need in the next few years. She may need to change her coverage as her needs change. Which of the following policies would meet her needs?
Adjustable life
Which of the following about individual health insurance policies is NOT correct?
All insurance companies that offer this type of policy are required to charge the same rates.
Which of the following is a type of motor vehicle insurance available to drivers?
All of the these may be available to drivers
The most common risks are
All of these are common risks.
Which of the following is correct about your health plan's summary plan description?
All of these are correct.
Homeowner's insurance covers all of the following except
All of these are covered.
All of the following are sources of disability income except
All of these are sources of disability income.
Which of the following questions should one ask when developing a risk management plan?
All of these questions should be asked when developing a risk management plan.
Tom wanted to receive as many discounts on his home insurance as possible. Which of the following would NOT provide a discount?
All of these should provide a discount for Tom.
Which of the following is a charge you will pay when you purchase a variable annuity?
All of these.
Amber had permission from Bradley to borrow his car to run some errands. Unfortunately, while Amber was driving, she looked down to change songs on her iPod and sideswiped a car and hit a bicyclist. Based on her experience, which of the following would be true?
Amber's insurance policy should cover any property damage claims since she was driving Bradley's car with his permission.
Which of the following statements is correct?
An immediate annuity allows an individual to receive income payments from an annuity beginning at once.
Medical payments coverage applies to medical expenses of
Anyone who is injured in your vehicle, including you.
This health insurance provision lets your insurer make direct payments to your doctor or hospital.
Assigned benefits
Homeowner's insurance covers all of the following except
Automobiles.
A person who is named to receive the proceeds from a life insurance policy is a(n)
Beneficiary.
Brittany and Brandon are both charged $250 for an office visit to the same specialist. Brittany's reimbursement policy has a deductible of $300. Once she has met the deductible, the policy will cover the full cost of her visits. Brandon's indemnity policy will pay him $150, the maximum amount his plan provides for a visit to any specialist. Which of the following is correct?
Brittany will pay more because she must pay the entire bill since she has not met her deductible while Brandon will have part of his bill paid by his policy.
If you want to purchase term insurance, you will receive all of the following except
Cash value.
Nancy is studying the health insurance plan options offered by her employer. She wants a policy that will have the insurance pay a percentage of her medical expenses after she meets her deductible. She should review the
Coinsurance.
The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a(n)
Comprehensive major medical policy.
Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his
Comprehensive physical damage coverage.
Samantha was driving on the highway during a storm and hail dented her car. This damage would be covered under her
Comprehensive physical damage coverage.
Zachary lived in a neighborhood that was known for gang activity. One day, he noticed that his car had been vandalized. This damage would be covered under his
Comprehensive physical damage coverage.
Which of the following is NOT a type of permanent life insurance?
Decreasing term
Jenny wants health insurance that sets the amount that she must pay toward medical expenses before the insurance starts paying benefits. She is concerned about a
Deductible
Miguel is concerned that the health insurance option he is considering plays upon unrealistic fears. He is most concerned about a
Dread disease policy.
Donald and Charlene are married and do not have any children. They plan to ensure that the other will not be unduly burdened by debts in case one of them dies. Each plans to continue to work after the other one dies. Which method are they using to determine their life insurance needs?
Dual income, no kids method
Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula: Current income × 7 × 70%. Which method are they using to determine their life insurance needs?
Easy method
When Stanley was visiting Elaine, he tripped on her front porch step and sprained his ankle. His injuries were covered by
Elaine's medical payments coverage.
Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. Which method are they using to determine their life insurance needs?
Family need method
Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life?
Fixed annuity
Pam just started working at XYZ Widget Company and finally wants to get insurance coverage through her employer. She does not want to take a medical exam to get coverage, because she has some underlying health conditions and is concerned that she might not qualify for a policy. Which of the following life insurance policies should she apply for?
Group life
Bonnie is most concerned about being able to buy additional insurance without undergoing medical exams. Which of the following riders should she consider?
Guaranteed insurability option
If you are concerned that your disability insurer may try to cancel your coverage if your health becomes poor, you should look for a plan that offers
Guaranteed renewability.
Yogi is applying for insurance for his new home. Which of the following is correct?
He should base the amount of insurance on the price to rebuild or repair the new home.
Zach is applying for insurance for his new home. Which of the following is correct?
He should insure the building under the replacement value method to receive the full cost of repairing or replacing it.
Andrew is applying for insurance for his new home. Which of the following is correct?
He should use the replacement value method for settling claims to receive the full cost of repairing or replacing his personal belongings.
What is the most important part of an insurance agent's job?
Help you select the proper kind of protection within your financial boundaries.
Barnaby is applying for insurance for his new home. Which of the following is correct?
His coverage should be increased as construction costs rise.
The type of health insurance coverage that pays for some or all of the daily costs of room and board during a hospital stay is
Hospital expense.
Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now?
Immediate annuity
The best place to keep a household inventory is
In a safe deposit box.
A provision in a health insurance policy that sets specific levels of repayment for certain services is called
Internal limit.
Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?
It builds cash value.
Which of the following should reduce your auto insurance premium?
Maintain good grades in college
The type of health insurance coverage that takes up where basic health insurance coverage leaves off is
Major medical expense.
The main goal when setting insurance goals is to
Minimize personal, property, and liability risks.
Which of the following is NOT a type of health insurance available to individuals or employees?
Minor medical indemnity insurance
Fred bought life insurance when he was 47, although he told the insurance company that he was 42. He has since died. Which of the following provisions will affect the amount of money his beneficiaries will receive?
Misstatement of age provision
This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy.
Multiyear level term
Wendy has had a life insurance policy for five years with her spouse listed as the person who receives the benefit if she dies. She was recently divorced. Which of the following provisions should she take action on?
Naming a beneficiary
Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The fact that Barbara didn't put away the skateboard is called
Negligence
The failure to take ordinary or reasonable care to prevent accidents from happening is called
Negligence.
Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 minus Youngest child's age) × $10,000. Which method are they using to determine their life insurance needs?
Nonworking spouse method
Which of the following is correct?
One question that should be asked when developing a risk management plan is "What do I need to insure?"
After you have reached a certain limit that you must pay for the deductible and coinsurance, the insurance company covers 100% of any additional cost. This is called
Out-of-pocket limit.
You want to purchase a life insurance policy that pays a policy dividend. What kind of policy would you want to purchase?
Participating policy
What is the primary purpose of medical expense insurance?
Pay actual medical costs for illness or injury.
Anything that may possibly cause a loss is called a
Peril.
Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a
Peril.
Personal property insurance covers
Personal property items up to 55-75% of the insured value of the home.
This type of plan combines features of Health maintenance organizations and PPOs. It uses a network of participating physicians and medical professionals who have contracted to provide services for certain fees.
Point-of-service (POS) plan
Yvonne's employer offers a health plan that has a group of doctors and hospitals that agree to provide specified medical services to members at prearranged fees. This health plan offers some flexibility since members can either visit a physician from a list or go to their own doctors. What kind of plan does her employer offer?
Preferred provider organization (PPO)
Patrick has an old car and wants to keep his insurance costs down, but he wants coverage in case he damages the property of others, including street signs and telephone poles. In order to minimize the financial impact of an accident he may cause, he should, at a minimum, carry which type of insurance?
Property damage liability coverage.
Most people buy life insurance to
Protect the people who depend on the insured from financial losses caused by his or her death.
A health insurance plan should include all of the following "must-haves" except
Provide a lifetime maximum level of coverage of up to $50,000.
If you choose to avoid the risk of a traffic accident by not driving to work, you are using
Risk avoidance.
If you choose to wear your seatbelt, you are using
Risk reduction.
If you choose to insure your home or your vehicle, you are using
Risk shifting.
Mark was severely injured while on vacation and expects to be unable to work for at least 12 months. Because of his injury, he should expect to be eligible for disability income from
Social Security.
Blue Cross and Blue Shield are
Statewide organizations.
Fran is interested in purchasing a major medical policy that limits the total out-of-pocket amount that she will have to pay. She should consider a
Stop-loss provision.
The type of health insurance coverage that may specify the maximum payment amount for each type of operation is
Surgical expense.
Which of the following is NOT a type of permanent insurance?
Term life
Another name for temporary life insurance is
Term life insurance.
Georgia was supposed to pay her premium by the 15th of the month. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium (without penalty)?
The grace period
Liability is defined as
The legal responsibility for the financial cost of another person's losses or injuries.
Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?
The location of your employer.
Which of the following is TRUE about long-term care insurance?
The older you are when you enroll, the higher the annual premium.
The policy loan provision means that
The policy owner can borrow any amount up to the cash value of the policy.
Homeowner's insurance covers all of the following except
Theft of jewelry valued at $25,000.
Which of the following about individual health insurance policies is correct?
They are available for the self-employed or others who are dissatisfied with the coverage that their group plan provides.
Health insurance plans may reimburse an individual for hospital stays, doctors' visits, and medications.
True
A policy that supplements your basic personal liability coverage is called a(n)
Umbrella policy.
Polly wants the opportunity to change the amount she pays for her annual premium through the life of her insurance policy without changing her coverage. Which of the following types of whole life policies would meet her needs?
Universal life
Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?
Variable annuity
Megan wants to purchase a type of whole life insurance policy that will allow part of her premium to be invested in stock, bonds, or money market funds. Which of the following policies should she buy?
Variable life
Another name for permanent life insurance is
Whole life.
Katrina was injured in an accident at work. The benefits she will receive to cover part of her income will come from
Worker's compensation.
If you have a conversion term policy,
You can convert your term policy to a permanent policy.
If you have a loss due to a flood,
You must have already purchased special coverage if you live in an area that has frequent floods in order to be covered.
If you have a renewable term policy,
Your premium may increase if you continue it for another term because you will be older.
If you have a multiyear level term policy,
Your premium will be the same for the duration of your policy.
Which of the following is NOT one of the commonly used general risk management techniques?
risk maximization
