Finance Exam 3

An insurance company is a __________ business that agrees to pay for losses that may happen to someone it insures. risk-sharing
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
Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a Peril
An insurance company will Insure pure risk, but not speculative risk
The main goal when setting insurance goals is to Minimize personal, property, and liability risks
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
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
Liability is defined as The legal responsibility for the financial cost of another person’s losses or injuries
Timothy was driving his friend Nick to football practice. While driving, he was hit by a driver who had coverage of 100/300/50. Tim and Nick each suffered some physical injuries. Based on this information, which of the following is correct? The policy would provide a maximum of $ 100,000 for each person who was injured, and no more than $300,000 for total injuries of all patties in the accident
Medical payments coverage applies to medical expenses of Anyone who is injured in your vehicle, including you
Paul was driving his kids to a piano lesson in a 2005 minivan. While driving, he was hit by an uninsured motorist. Although Paul and his kids had only minor injuries, their vehicle was totaled. Based on this information, which of the following is correct? Paul’s uninsured motorist’s protection should cover the cost of injuries for Paul and his kids
Cheyenne has a home insured for $300,000. It would cost $320,000 to rebuild her home. If she has home insurance that provides personal property coverage at 70% of value, how much of her household belongings would be covered? $210,000
What does 100/300/50 coverage mean? The policy would provide a maximum of $ 100,000 for each person who was injured, and no more than $300,000 for total injuries of all parties in the accident
Most people receive health insurance under a group plan from their employer
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.
The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests is Physician expense
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
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
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
What is the primary purpose of medical expense insurance? Pay actual medical costs for illness or injury
Which of the following is TRUE about long-term care insurance? The older you are when you enroll, the higher the annual premium.
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
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.
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)
Georgia is considering between two health insurance policies. One includes a deductible of $600 and the other includes a coinsurance of 20%. If a bill is $4,000, how much will she be required to pay under the policy with the coinsurance? $800
Larry has a health insurance policy that includes a deductible of $ 1 ,000 and a coinsurance of 20%. If his total bill is $7,000, how much will his insurance pay? $4800
Sandy went to the doctor three times, and each appointment cost $200. Her copayment was $25 per visit. How much was Sandy required to pay in total for her three visits? $75
Most people buy life insurance to Protect the people who depend on the insured from financial losses caused by his or her death
Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula:Current income x 7 x 70%. Which method are they using to determine their life insurance needs? Easy method
Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 Youngest child’s age) x $10,000. Which method are they using to determine their life insurance needs? Nonworking spouse method
Another name for temporary life insurance is Term life insurance
Which of the following is NOT a feature of whole life insurance? The policy will return all premiums if you survive to the end of the policy
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
Amy bought a life insurance policy and named Ben as her beneficiary. She has since died. Who will receive the benefits from her policy? Ben
What is a factor that affects the price a company charges for a life insurance policy? 1. The policy features.2. The return on its investments.3. The mortality rate it expects among its policyholders. 4. The company’s cost of doing business.
Stephanie is the wage earner in a “typical family” with $40,000 gross annual income. Use the easy method to determine how much insurance she should carry. $196,000(Current Income x 7) x 70%
Holly and Matt want to use the “nonworking” spouse method to determine the amount of life insurance coverage they need. If their youngest child is 5 years old, how much do they need? $130,000(18 – Youngest child’s age) x $10,000
Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family, which includes two children, ages 4 and 10. They have determined that their annual income is $70,000 and their net worth is now $ 150,000. What is the amount of life insurance they should carry using the easy method? $343,000(Current Income x 7) x 70%
A person who is named to receive the proceeds from a life insurance policy is a(n) Beneficiary
Marianne and Roger are in good health and have reasonably secure careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. If one should die, they think that funeral expenses would be $12,000.What is their total insurance need using the DINK method? $98,000Half of debts + funeral expenses
DINK stands for double income, no kidsHalf of debts + funeral expenses

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