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Finance Flashcards

Family Finance Ch 10-12 Test

Owning and driving a car are examples of… Exposures
What describes the potential magnitude of a loss or losses? Loss severity
What would be the recommended action for a loss that has low frequency and high severity? Purchase insurance to cover the potentially large losses
What is the way to handle risk if you installed heavy duty locks? Loss control
What is the best description of the large loss principle? Insure the risks you cannot afford and assume the risks that you can reasonably afford
When does Homeowner’s Liability Insurance cover losses? When you are legally liable for another person’s losses other than losses from vehicle use
What is true about actual cash value? It represents the purchase price of the property less depreciation
If a person has auto insurance coverage of 100/250/50, how much per person bodily injury protection do they have? $100,000
What is true about comprehensive auto insurance? It protects against property damage losses caused by perils other than collision and rollover
What provides protection for accident and theft losses to movable property regardless of where the loss occurs? Floater policies
What is not one of the 4 areas from the reading that people need to protect? Retirement
What is the most important part of auto insurance coverage because it covers the area with the greatest potential for loss? Liability
What is false about umbrella insurance? It is very expensive
What best describes Medicare? The federal government’s health care program for person’s aged 65 and older
What is true about long-term care insurance? It provides reimbursement for costs associated with custodial care
What’s false about long-term care insurance? The longer the waiting period the higher the premium
What’s true about Disability Income Insurance? It will replace income when there is a disability
What would pay benefits if an individual could not perform the occupation they had when they became disabled? Own-occupation disability insurance
What provides a broad range of health care services for a set monthly fee on a prepaid basis that focuses on preventive care? HMO
What’s the main benefit of a health Savings Account? It provides a tax deductible account for paying medical bills
What is the portion that an insured person must pay annually before receiving any reimbursements? Deductible
What policy limits specifies the max reimbursement for a particular health care expense? Item
What rights does COBRA provide for a person? Allows a person to remain a member of a group health plan for a set period of time after work has terminated
What’s true about the Patient Protection and Affordable Health Care Plan (Health Care Reform)? Companies can no longer set a max lifetime payout
What is false about social security survivor’s benefits? The level of benefit depends on the age of retirement
What person controls all rights granted by a life insurance policy? The policy holder
What person would receive the benefits if the beneficiary dies before the insured? The contingent beneficiary
What considers all the factors that might potentially affect the level of need for life insurance? Needs based
What is false about cash value life insurance? It’s the least expensive form of life insurance
What describes level-premium term insurance? It’s the term policy with a long time period where the premiums remain constant
What are amendments and additions to the basic insurance policy? Endorsements
What’s a correct fact about reassessing your life insurance needs? Parents with grown children have a decreased need for life insurance
What was not part of the info for “buy term and invest the rest”? The principle consists of finding the difference between the value of the life insurance portion of a cash value policy and the value of the investment portion of the cash-value policy

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