Personal Finance Homework - Chapters 8-10

An individual who purchases an insurance policy is called:

A policyholder.

Which of the following households most likely has the greatest need for life insurance? A: A household with children B: An adult child living with parents C: An independently wealthy adult D: A retired couple with a pension E: A single adult living alone

A: A household with children

Which of the following is NOT one of the commonly used general risk management techniques? A: Risk maximization B: Risk assumption C: Risk reduction D: Risk shifting E: Risk avoidance

A: Risk maximization

This health insurance provision lets your insurer make direct payments to your doctor or hospital.

Assigned benefits

Homeowner's insurance typically covers all of the following except: A: The building in which you live and any other structures on the property. B: Automobiles. C: Personal liability and related coverage. D: Personal property. E: Additional living expenses.

B: Automobiles.

A person who is named to receive the proceeds from a life insurance policy is a(n):

Beneficiary.

Which of the following about individual health insurance policies is correct? A: They are primarily for employees of small companies. B: They are used by employees of large organizations. C: They are available for the self-employed or others who are dissatisfied with the coverage that their group plan provides. D: They are permitted for individuals only, not for families. E: All insurance companies that offer this type of policy are required to charge the same rates.

C: They are available for the self-employed or others who are dissatisfied with the coverage that their group plan provides.

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

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 set amount that you must pay toward medical expenses before the insurance company pays benefits is called a(n):

Deductible.

A health insurance plan should include all of the following "must-haves" except: A: No unreasonable exclusions. B: Basic coverage for hospital and doctor bills C: Coverage for at least 120 days' hospital room and board in full. D: Limits on out-of-pocket expenses to no more than $8,000 to $9,000 per year. E: Lifetime maximum coverage of up to $50,000.

E: Lifetime maximum coverage of up to $50,000.

Which of the following is correct? A: A solid risk management plan works well without insurance as a component. B: The main goal of insurance should be to maximize personal, property, and liability risks. C: The best risk management plan is one that does not change throughout one's life. D: Once a plan is set up, it should be reviewed every 10 years. E: One question that should be asked when developing a risk management plan is "What do I need to insure?"

E: One question that should be asked when developing a risk management plan is "What do I need to insure?"

Steve's employer offers a health plan that stresses preventive services and covers routine immunizations and checkups, screening programs, and diagnostic tests. What kind of plan does his employer offer?

Health maintenance organization (HMO)

The best place to keep a household inventory is:

In a safe deposit box.

Medicare (Part A) covers:

Inpatient hospital care.

A provision in a health insurance policy that sets specific levels of repayment for certain services is called a(n):

Internal limit.

Jack needs comprehensive medical coverage. However, his income is very low. What plan should he investigate?

Medicaid

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.

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 a(n):

Out-of-pocket limit.

Personal property insurance covers:

Personal property items up to 55-75 percent of the insured value of the home.

The two basic types of risk that people face regarding potential property losses are:

Physical damage and damage caused by criminal behavior.

What is the fee that a policyholder pays when an insurance company agrees to take on the risk?

Premium

Most people buy life insurance to:

Protect the people who depend on the insured from financial losses caused by his or her death.

If you choose to avoid the risk of a traffic accident by not driving to work, you are using:

Risk avoidance.

The Health Insurance Portability and Accountability Act of 1996:

Sets state standards to ensure that workers do not lose their health insurance if they change jobs.

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.

Another name for temporary life insurance is:

Term life insurance.

A policy that supplements your basic personal liability coverage is called a(n):

Umbrella policy.

What questions should one ask when developing a risk management plan?

What kind of insurance should I buy? Whom should I buy insurance from? What do I need to insure? How much should I insure something for?

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.