Test 3 Finance Turner

Statisticians who specialize in estimating the probability of death based on personal characteristics are calleda) insurance analystsb) actuariesc) morbidity statisticiansd) analysts analystse) none of the above b
Sharing the financial consequences associated with risk in the insurance industry is sometimes calleda) risk splittingb) risk migrationc) risk poolingd) risk deferringe) none of the above c
The individual designated by the owner of the life insurance policy to receive the policy’s proceeds upon the death of the insured is called thea) beneficiaryb) insuredc) actuaryd) policy holder a
John purchases a life insurance policy on his wife Betty where he pays the premium and he will receive the life insurance money when she dies. John is both the _____ and the _____ who will receive the ________ upon the death of Betty, the ______.A) policy owner, insured, face amount, beneficiaryb) beneficiary, premium payer, face amount, policy holderc) policy owner, beneficiary, face amount, insuredd) insured, beneficiary, money, policyholdere) none of the above c
Using the needs approach to determine the amount of coverage looks from the perspective of the ______.a) salesmanb) named insuredc) policy ownerd) beneficiary d
With decreasing term insurancea) the premiums decline, and the face amount of the policy declinesb) the premiums remain constant, but the face amount of the policy declinesc) the premiums decline, and the face amount of the policy increasesd) the premiums remain constant, and the face amount of the policy remains constant b
________ is insurance that provides permanent insurance coverage as whole life does; however the policyholder, not the insurance company, takes on the investment risk.a) Universal life insuranceb) Variable life insurancec) convertible life insuranced) none of the above b
The settlement option that provides for ongoing payments for a period if time is called______.a) a premium payoutb) a reverse premiumc) an annuityd) an annual premium c
Cash value policies include a clause that allows you to borrow against the cash value of the policy.a) liquidityb) grace periodc) loand) reinstatement c
What are the risks associated with term insurance policies?a) You may need to have insurance coverage past the term expiration dateb) The cash value does not earn a decent returnc) the renewal premium may be cost prohibitived) Both a and c are correct d
What are the disadvantages of group term insurance?a) The premiums are usually subsidized by the employerb)The cost to convert from group coverage to individual coverage if you leave the company may be cost prohibitivec) Relying on group insurance may hinder your decision to leave the companyd) Both B and C are correct d
What are the main features of whole life insurance?a) It provides you with permanent insurance regardless of age and health issuesb) the premiums stay constant for your entire lifec) The non-forfeiture right allows you access to the cash value account if neededd) all of the above are correcte) all but b are correct d
What is the purpose of companies such as A.M. Best, Moody’s and Standard & Poor’s?a) They evaluate and rate the financial stability of the insurance industryb) They sell life insurance directly to consumers without agentsc) They sell low term cost term insurance via the Internet.d) They provide reinsurance coverage to the insurance industry a
Billy’s occupation is a potentially dangerous one-he is a skydiving instructor. He agent pointed out that monthly premiums will be high. Billy wants a lot of value for his money. He could take advantage of _______ life insurance at this time to save his money.a) universalb)wholec) variabled) credite) term e
A.M. Best, Standard and Poor’s, Moody’s, and Duff & Phelps preform a vital service for the insurance industry. What do they do?a) They provide a listing of all agentsb) They provide a listing of all agents who have violated insurance laws.c) They tell you the best price dealsd) They rate the quality level and performance of each companye) They provide information on the best policies d
Dwayne Blue was pleasantly surprised to find out that within three to five years after expiration of a previous life insurance policy, he cana) change beneficiariesb) change the incontestability clausec) void the grace periodd) reinstate the policy subject to current qualificationse) both A and D above d
The policy feature that allows you to pay the premium late but still retain coverage is known as the a) nonforfeiture clauseb) policy reinstatement clausec) grace periodd) Incontestability clausee) loan clause c
Special provisions that may be added to your policy which either provide extra benefits to the beneficiary or limit the company’s liability under certain conditions are known asa) attachmentsb) alternative provisionsc) secondary provisionsd) riderse) none of the above d
Sally Heath has the option of obtaining life insurance through her place of employment. She will not need to take a physical exam. This type of policy would be a/an ____ policy.a) employer’s life b) group term life c) universal lifed) intermediate term lifee) renewable term life b
You are considering the need for insurance. You desire a policy that provides permanent protection, has a fixed premium, and provides a death benefit. What type of policy would you purchase?a) term insurance b) whole life insurance c) universal life insuranced) fixed premium insurancee) none of the above b
Your medical insurance contains a feature that limits the total dollar amount that you are responsible for paying. This is called a a) stop-loss productionb) contingency limitation provisionc) maximum payment provisiond) limitation provisione) none of the above a
Insurance that covers medical costs beyond those covered by basic health insurance is a) premium insuranceb) major medical insurancec) catastrophic insuranced) none of the above b
Genevieve’s husband died from lung cancer. As a result, she purchased additional _____ insurance.a) dread diseaseb) eyewearc) dentald) accidente) all of the above a
Under COBRA, if you work for a company with at least 20 employees, you will be given the opportunity to continue your health insurance coverage for ____ after you leave the company, depending on why you left.a) 6-12 monthsb) zero to six months c) 72-84 monthsd) 18-36 monthse) none of the above d
Which of the following is a government-sponsored health care plan?A) Worker’s Compensationb) Medicaid c) Medicared) A and B onlye) A,B, and C e
Suppose that you wanted to purchase insurance that is sold by a private insurance company that will help bridge the gap in your Medicare coverage. You would purchase what type of insurance?a) Medicare Bridge Insuranceb) Medicare Additional Insurancec) Medicare Plus Insuranced) Medigap insurancee) none of the above d
Medicare part____ pays for doctor’s fees/medical services/supplies, while part ____ pays for hospital insurance benefits.a) A;Cb) B;Cc) A;Bd) B;Ae) none of the above d
Veronica was recently diagnosed with a heart condition. Her doctor’s bill was $4200 for the diagnostics. Her policy has a $250 deductible and a 80/20 coinsurance provision up to $10,000 and then the insurance pays 100% thereafter. In total, how much will Veronica pay for her diagnosis?a) $250b) $10,000c) $1040d)$4200(Understand HOW to do this, the numbers will be different on the test.) c
James is employed by the university. Yesterday he fell outside of his office due to water on the floor. He broke his leg in two places. What type of health care plan will cover James’ expenses?a) Medicaidb) Medigapc)Worker’s compensationd) Medicaree) none of the above c
Health insurance that provides payments to the insured in the event that the insured’s income is interrupted by illness, sickness, or accident is called ____ insurance.a) disabilityb) accident and sicknessc) income interruptiond) unemployment a
Why are so many people without disability insurance?a) They cannot qualify for it.b) People don’t know about itc) Employers don’t supply itd) It may not be available in their statee) The price is prohibitive for most peopl e
Why is long-term care insurance needed?a) It is not covered under Medicare.b) It is not covered by major medical insurancec) Life expectancies have increasedd) all of the abovee) none of the above d
Your apartment building burned down while you were on vacation. Fortunately, you have renter’s insurance. What will your policy cover?a) your hotel and additional expenses based on a percentage of your property coverageb) any damages to the building structurec) Your neighbor’s personal propertyd) All of the above are correcte) none of the above are correct A
Your brother is living in an apartment complex that has had a recent rash of robberies. He has $5,000 worth of rare coins. What should he do to protect himself in case of a robbery?a) Take out personal property replacement cost coverageb) Take a written and video tape inventory of his propertyc) add personal articles floater to his policy.d) Only B and C abovee) A, B, and C above e
Which of the following is not a consideration in determining the amount of homeowner’s insurance a person’s needs?a) Determine if detached structures are adequately covered under standard policiesb) Purchase flood or earthquake coverage if you are in an area prone to these occurrences.c) Match the insurance coverage of similar homes in your neighborhood.d) Protect against the effect of inflation eroding away your coveragee) cover the entire replacement cost in the even of a complete loss c
The purpose of a personal umbrella policy, as an addition to your homeowner’s policy, is primarily to protect you froma) faulty construction of your homeb) acts of God, such as falling objects, hail, etcc) flood damaged) lawsuits and judgementse) contested title to your property d
The disadvantage of actual cash value coverage of personal property compared to replacement cost coverage is that isa) will reimburse you for the cash value of a new itemb) will reimburse you for replacement cost minus estimated depreciationc) does not have to be reported as a loss on your tax returnd) must be reported as a loss on your tax returne) none of the above b
If you wanted to obtain an endorsement that automatically updates the level of property coverage based on an index of replacement costs that continually updates the cost of building a home, you would ask for a(n)a) automatic adjustment policyb) replacement cost indexc) continual adjustment policyd) inflation guarde) none of the above d
Antoine LaDuke suffered a major loss on his older home due to mud from a flood. Although he had homeowner’s insurance, what was the probable reason he was not covered?a) His home was probably too expensiveb) His policy excluded flood-related damagesc) older homes are excluded from flood-related damagesd) This is a personal liability issue b
Supplemental coverage for homeowner’s insurance is available through endorsements. Which one of the following is not a common for of additional coverage?a) earthquake coverageb) medical paymentc) flood protectiond) personal articles floaterse)inflation guard b
The replacement value of the house less accumulated depreciation (which is the decline in value over time due to wear and tear) is known as _____.a) market valueb) actual cash valuec) depreciationd) replacement valuee) none of the above b
Alfred lost his 3 year old camera. It cost him $200 three years ago and had a life expectancy of 6 years. Alfred has actual cash value insurance on this camera which means his insurance company will issue him a check for ___ for his loss. A new camera costs $500.A) $100B)none of the abovec) $500d$200 a
You have the most popular house on the block for the neighborhood children to play at. You have a trampoline, tree fort and jungle gym. Your family also has two large German Shepherds. What should you consider given the described situation?a) Purchasing earthquake coverageb) Purchasing an umbrella policyc) Purchasing a personal property replacement cost coveraged) None of the above b
You had several of your son’s friends over last night for a sleepover. While dropping off their child one of the parents did not see your basketball hoop and smashed it beyond repair with her car. Where would you look for damage payment?a) the driver’s automobile liability coverageb) Section II of the driver’s homeowner’s insurancec) the driver’s automobile comprehensive insuranced) the drive’s homeowner’s insurancee) the driver’s automobile collision insurance a
Which of the following is not a determinant of the cost of your automobile insurance rates?a) your marital statusb) your credit scorec) the number of children that you haved) your driving recorde) your age c
Which of the following are among the most common driver distractions that lead to insurance claims?a) talking on cell phonesb) reading somethingc) applying make-up or shavingd) eating somethinge) all of the above are cited as the most common driver distractions e
Which of the following are not discounts for PAP coverage?a)low miles per gallon discountb) anti-theft equipment discountc) accident free discountd) good student discounte) all of the above are discounts for PAP a
Which of the following will most likely pay the least for automobile insurance, assuming they all drive identical cars?a) a 32-year-old married man with bad credit and a bad driving recordb) a 29-year-old woman with a good credit score and driving recordc) a 55-year-old woman with two drunk driving arrestsd) a 20-year-old man who drives 50, 000 miles per year and lives in a big city b
What characteristics will affect the cost of your car insurance?a) how many miles you driveb) where you residec) the type of automobile you drived) all of the abovee) all but B are correct d
Young ____ generally pay the most for their insurance, because they have a statistically greater chance of having an accident.a) married femalesb) married malesc) unmarried malesd) unmarried females c
Which of the following could increase the cost of your auto insurance?a) decreasing the amount of your deductibleb) driving more miles per yearc) driving a sportier card) all of the above d
______ auto insurance pays for your losses and the losses suffered by your passengers, while the other driver’s insurance would pay for his or her losses. This arrangement is made to keep insurance costs down, especially for settling claims.a) PIPb) No-faultc) PAPd) Comprehensivee) Your fault b

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