Personal Finance Exam 4

What is the fee that a policyholder pays when an insurance company agrees to take on the risk? A) Insured B) PerilC) Premium D) Risk E) Coverage C) Premium
Barbara left a skateboard on her front steps. Her neighbor tripped on the skateboard and was injured. The skateboard was a A) Risk. B) Premium.C) Hazard. D) Peril. E) Negligence. C) Hazard.
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 calledA) Negligence. B) Hazard. C) Peril. D) Premium. E) Risk. A) Negligence.
Barbara left a skateboard on her front steps. A windstorm swept the skateboard up and through her window. The windstorm was a A) Negligence. B) Risk.C) Peril. D) Hazard. E) Premium. C) Peril.
Anything that may possibly cause a loss is called aA) Peril. B) Negligence. C) Speculation. D) Premium. E) Hazard. A) Peril.
The failure to take ordinary or reasonable care to prevent accidents from happening is called A) Risk. B) Peril. C) Hazard. D) Premium.E) Negligence. E) Negligence.
If you choose to avoid the risk of a traffic accident by not driving to work, you are using A) Risk shifting.B) Risk avoidance. C) Risk assumption. D) Risk reduction. E) Risk increasing. B) Risk avoidance.
If you choose to wear your seat belt, you are using A) Risk increasing.B) Risk reduction. C) Risk avoidance. D) Risk shifting. E) Risk assumption. B) Risk reduction.
If you choose to take responsibility for the negative results of a risk, you are using A) Risk avoidance. B) Risk shifting. C) Risk reduction.D) Risk assumption. E) Risk increasing. D) Risk assumption.
If you choose to insure your home or your vehicle, you are using A) Risk reduction. B) Risk assumption.C) Risk shifting. D) Risk increasing. E) Risk avoidance. C) Risk shifting.
The main goal when setting insurance goals is to A) Keep the coverage constant or unchanged throughout one’s life. B) Maximize personal property and liability risks. C) Increase possible loss of property caused by perils.D) Minimize personal, property, and liability risks. E) Increase possible loss of income caused by illness. D) Minimize personal, property, and liability risks.
Liability is defined asA) The legal responsibility for the financial cost of another person’s losses or injuries. B) Risk assumption. C) Negligence. D) A loss due to physical damage. E) An insurance program for individuals and households. A) The legal responsibility for the financial cost of another person’s losses or injuries.
Homeowner’s insurance covers all of the following except A) Personal liability and related coverage. B) Additional living expenses.C) Automobiles. D) Personal property. E) Building in which you live and any other structures on the property. C) Automobiles.
Homeowner’s insurance covers all of the following except A) Furniture. B) Appliance.C) Theft of jewelry valued at $25,000. D) Clothing. E) Rental rug cleaner. C) Theft of jewelry valued at $25,000.
All of the following are acceptable types of documentation for a household inventory exceptA) A listing of items and their details in your memory. B) Household inventory form from your insurance agent with purchase dates and costs. C) Receipts, serial numbers, brand names, and proof of value documents. D) Photographs with dates purchased and values of objects listed on the backs. E) Video recordings of your home and its contents. A) A listing of items and their details in your memory.
Insurance that covers valuable items, such as an expensive musical instrument, is called A) Buildings and other structures coverage.B) Personal property floater. C) Personal liability insurance. D) Household inventory insurance. E) Homeowner’s insurance. B) Personal property floater.
Personal property insurance covers A) The theft of jewelry valued at $25,000.B) Personal property items up to 55-75% of the insured value of the home. C) All items up to 200% of the insured value of the home. D) Clothing and some electronics, but not furniture and appliances. E) Furniture and appliances, but not clothing or some electronics. B) Personal property items up to 55-75% of the insured value of the home.
A policy that supplements your basic personal liability coverage is called a(n)A) Umbrella policy. B) Medical payments coverage. C) Homeowner’s insurance. D) Endorsement. E) Supplementary policy. A) Umbrella policy.
Which of the following is NOT correct about renter’s insurance? A) The broad form covers personal property against perils specified in the policy.B) Renter’s insurance covers the building and other structures on the site. C) The comprehensive form protects personal property against perils not specifically excluded in the policy. D) Typical coverage pays only the actual cash value of one’s losses. E) Renter’s insurance is relatively inexpensive. B) Renter’s insurance covers the building and other structures on the site.
Home insurance policies include coverage for all of the following except A) Emergency removal of property to protect it from damage. B) The cost of removing damaged property. C) Temporary repairs after a loss to prevent further damage.D) Business property. E) Credit card fraud. D) Business property.
Sandra is contacting several insurance companies to compare coverage for her home. Which of the following should NOT affect her premium?A) The location of her employer. B) Amount of coverage C) Deductible D) Type of structure E) Alarm system A) The location of her employer.
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? A) The bicyclist should cover his own medical expenses because he was at fault for riding on the road. B) Amber’s insurance company should refuse coverage of her medical payments because she was not driving in her own vehicle.C) Amber’s insurance policy should cover any property damage claims since she was driving Bradley’s car with his permission. D) Amber’s insurance should not cover any damage since she carried liability, collision, and comprehensive coverage. E) The insurance company of the owner of the sideswiped car should pay for all damages since the car was illegally parked. C) Amber’s insurance policy should cover any property damage claims since she was driving Bradley’s car with his permission.
Medical payments coverage applies to medical expenses of A) Anyone in your vehicle who is injured, except the driver. B) The owner of the vehicle, but not other passengers.C) Anyone who is injured in your vehicle, including you. D) The driver, but no passengers who are injured. E) The uninsured motorist who causes an accident. C) 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?A) Paul’s uninsured motorist protection should cover the cost of injuries for Paul and his kids. B) In all states, Paul’s uninsured motorist coverage must cover damage to all vehicles involved in the accident. C) The uninsured motorist will be required to purchase a new minivan for Paul’s family. D) The uninsured motorist needs to purchase insurance after the fact. E) It is likely that the uninsured motorist will not receive any citations or fines because she did not have insurance. A) Paul’s uninsured motorist protection should cover the cost of injuries for Paul and his kids.
Samantha was driving on the highway during a storm and hail dented her car. This damage would be covered under her A) Bodily injury liability coverage. B) Uninsured motorist protection.C) Comprehensive physical damage coverage. D) Property damage liability coverage. E) Medical payments coverage. C) Comprehensive physical damage coverage.
Madeline had a severe allergy attack and crashed her car into a telephone pole while sneezing. The damage to the telephone pole would be covered under Madeline’sA) Property damage liability coverage. B) Bodily injury liability coverage. C) Collision coverage. D) Uninsured motorist protection. E) Comprehensive physical damage coverage. A) Property damage liability coverage.
Henry was driving at dusk and hit a deer running across the road. His damage would be covered under his A) Collision coverage. B) Medical payments coverage. C) Uninsured motorist protection. D) Bodily injury liability coverage.E) Comprehensive physical damage coverage. E) Comprehensive physical damage coverage.
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? A) Medical payments coverage. B) Comprehensive physical damage coverage. C) Collision coverage.D) Property damage liability coverage. E) Bodily injury liability coverage. D) Property damage liability 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 A) Collision coverage. B) Property damage liability coverage. C) Uninsured motorist protection.D) Comprehensive physical damage coverage. E) The vehicle would not be covered because he was not in it when the damage occurred. D) Comprehensive physical damage coverage.
Various states are trying to reduce the time and cost of settling vehicle injury cases. One alternative is A) Having the state pay for driver’s insurance. B) Omitting uninsured motorist protection. C) Requiring the driver to pay all medical expenses. D) Requiring emergency road service coverage.E) Using the no-fault system. E) Using the no-fault system.
Which of the following is NOT correct? A) If you live in a rural area, your auto insurance premium will likely be lower than if you live in a large city.B) The cost and number of claims you have should not affect your premium. C) Your credit score can cause your premium to change. D) In general, young drivers (under 25) and elderly drivers (over 70) have more frequent and more serious accidents. E) Multiple accidents or tickets will increase insurance rates. B) The cost and number of claims you have should not affect your premium.
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? A) $120,000 B) $224,000 C) $320,000 D) $300,000E) $210,000 E) $210,000
Last month some of your friends were injured in an accident. Their total injuries were as follows:•Brenda $ 85,000•Raquel $ 125,000•Louis $ 40,000Coverage was 100/300/50. What was the total medical coverage in this accident? A) $85,000 B) $250,000 C) $40,000 D) $125,000E) $225,000 E) $225,000
The Health Insurance Portability and Accountability Act of 1996 A) Prevents employees from moving from one group health plan to another without a lapse in coverage. B) Is a replacement for the Consolidated Omnibus Budget Reconciliation Act of 1986. C) Sets state standards to ensure that workers do not lose their health insurance if they change jobs. D) Applies to individual health insurance policies.E) Sets federal standards to ensure that workers do not lose their health insurance if they change jobs. E) Sets federal standards to ensure that workers do not lose their health insurance if they change jobs.
Coordination of benefits (COB) provision applies to A) Combining the Health Insurance Portability and Accountability Act of 1996 and COBRA. B) Combining three or more disability policies issued for an individual. C) Combining health insurance and disability insurance coverage. D) Combining all group and individual insurance coverage.E) Combining the benefits of two insurance policies issued for a married couple. E) Combining the benefits of two insurance policies issued for a married couple.
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 A) Dental expense. B) Surgical expense. C) Major medical expense.D) Hospital expense. E) Physician expense. D) Hospital expense.
The type of health insurance coverage that may cover routine doctor visits, X-rays, and lab tests isA) Physician expense. B) Surgical expense. C) Major medical expense. D) Hospital expense. E) Dental expense. A) 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 A) Hospital indemnity policy. B) Dread disease policy.C) Stop-loss provision. D) Copay. E) Coinsurance. C) Stop-loss provision.
The insurance that helps pay hospital, surgical, medical, and other bills with a low deductible is known as a(n) A) Basic health insurance policy. B) Individual policy. C) Hospital indemnity policy. D) Dread disease policy.E) Comprehensive major medical policy. E) Comprehensive major medical policy.
This health insurance provision lets your insurer make direct payments to your doctor or hospital. A) Service benefits B) Benefit limits C) Exclusions and limitations D) Internal limitsE) Assigned benefits E) Assigned benefits
Which of the following is TRUE about long-term care insurance?A) The older you are when you enroll, the higher the annual premium. B) It covers help at home but not in a nursing home. C) These plans typically pay for all costs. D) It covers a stay in a nursing home but not help at home. E) Insurance plans are sold primarily to individuals in the 20-40 age group. A) The older you are when you enroll, the higher the annual premium.
A health insurance policy with this provision lists coverage in terms of services, not dollar amounts. A) Benefit limitsB) Service benefits C) Exclusions and limitations D) Assigned benefits E) Internal limits B) Service benefits
A policy that pays you back for actual expenses is calledA) A reimbursement plan. B) An indemnity plan. C) A deductible plan. D) A coinsurance plan. E) A reasonable and customary plan. A) A reimbursement plan.
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 calledA) Out-of-pocket limit. B) Deductible. C) Indemnity. D) Internal limit. E) Reimbursement. A) Out-of-pocket limit.
A provision in a health insurance policy that sets specific levels of repayment for certain services is called A) Deductible. B) Out-of-pocket limit. C) Indemnity.D) Internal limit. E) Reimbursement. D) Internal limit.
A health insurance plan should include all of the following “must-haves” except A) Impose no unreasonable exclusions.B) Provide a lifetime maximum level of coverage of up to $50,000. C) Offer basic coverage for hospital and doctor bills. D) Limit out-of-pocket expenses to no more than $3,000 to $5,000 per year. E) Provide at least 120 days’ hospital room and board in full. B) Provide a lifetime maximum level of coverage of up to $50,000.
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? A) Public insurance company B) Medicaid C) Medicare D) Hospital and medical service planE) Health maintenance organization (HMO) E) Health maintenance organization (HMO)
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?A) Preferred provider organization (PPO) B) Medicare C) Public insurance company D) Medicaid E) Hospital and medical service plan A) Preferred provider organization (PPO)
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. A) Medicare B) Public insurance company C) Home health care agency D) Hospital and medical service planE) Point-of-service (POS) plan E) Point-of-service (POS) plan
Who is most likely to use a home health care agency?A) An elderly neighbor. B) A healthy young adult. C) A mother who is looking for a plan to cover immunizations for her children. D) A family with teenagers who need annual check-ups for sports at school. E) All of these would be likely to use a home health care agency. A) An elderly neighbor.
Anna contributes pretax dollars to an account managed by her employer for her health care expenses. If she does not spend all of her money by the end of the year, she may forfeit it. What kind of plan does she have? A) HRA B) MedicaidC) FSA D) Self-funded health plan E) Medicare C) FSA
Monica’s employer offers a health insurance plan with a very high deductible. In addition, her employer provides a fund for her to spend specifically on health care. What kind of plan does she have?A) HRA B) FSA C) Self-funded health plan D) HSA E) Medicare A) HRA
Jacob is concerned that his out-of-pocket health care expenses will be quite high, so he is considering adding contributions to a tax-free account that he can use with his high-deductible policy to cover catastrophic expenses. What kind of plan does he have? A) Self-funded health plan B) FSA C) HRA D) MedicareE) HSA E) HSA
Individuals over the age of 65 who are eligible for medicare may also be interested in purchasing more coverage called A) Statewide health coverage.B) Medigap. C) Medicare Part A. D) Medicaid. E) Medicare Part B. B) Medigap.
Jack needs comprehensive medical coverage. However, his income is very low. What plan should he investigate? A) Medicare Part CB) Medicaid C) Medicare Part A D) Medicare Part B E) Medigap B) Medicaid
Which of the following is incorrect? A) Disability can cause even greater financial problems than death. B) The exact definition of disability varies from insurer to insurer. C) Disabilities can include pregnancy, a non-work-related accident, or an illness.D) A bad disability policy pays you if you cannot work at your regular job. E) Disability income insurance provides regular cash income when you’re unable to work because of a disability. D) A bad disability policy pays you if you cannot work at your regular job.
How much does a private income insurance program pay for loss of normal income from a disability? A) 100% B) 0%C) 40-60%, with some plans paying up to 75% D) 10-30% E) 50-70%, with some plans paying up to 100% C) 40-60%, with some plans paying up to 75%
Katrina was injured in an accident at work. The benefits she will receive to cover part of her income will come from A) Her health insurance plan. B) A public income insurance program.C) Worker’s compensation. D) Medicare. E) Social Security. C) Worker’s compensation.
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 A) A public income insurance program. B) Medicare. C) Medicaid. D) Worker’s compensation.E) Social Security. E) Social Security.
Cameron, age 25, sustained a debilitating hand injury and was unable to perform his job as a viola player in the local orchestra for 45 days. His employer has a disability income insurance policy that pays 70% of take-home pay with an elimination period of 60 days and coverage to age 65. Given this information, which of the following is true for Cameron? A) His employer will pay 70% of his current income for 40 years. B) His employer will estimate his average salary through age 65 to determine his disability income.C) He will not be eligible for any disability income because his disability ended before the elimination period ended. D) He will receive disability income for 15 days. E) He will receive disability income for 45 days. C) He will not be eligible for any disability income because his disability ended before the elimination period ended.
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 A) A short elimination period. B) A plan that provides 70-80% of your take-home pay. C) Accident and sickness coverage.D) Guaranteed renewability. E) Duration of benefits to age 65. D) Guaranteed renewability.
Under the Patient Protection and Affordable Care Act of 2010, which of the following is NOT correct?A) Employers must offer continuing coverage through COBRA for up to 24 months after you leave your job. B) Requires new health care plans to allow adult children to remain on their parents’ insurance policy until age 26. C) Expands the Medicaid program for the nation’s poorest individuals. D) Prohibits denying coverage to children with preexisting medical conditions. E) Most insurers must provide preventive care screenings without charging deductibles or co-pays. A) Employers must offer continuing coverage through COBRA for up to 24 months after you leave your job.
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?A) $800 B) $0 C) $600 D) $4,000 E) $120 A) $800
Georgia has a health insurance policy that includes a deductible of $500. If her total bill is $3,000, how much will her insurance pay? A) $0 B) $3,500 C) $3,000D) $2,500 E) $5,000 D) $2,500
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?A) $75 B) $200 C) $25 D) $525 E) $175 A) $75
Cynthia was charged $300 for a specialist office visit. Her indemnity policy will pay $125. What amount will she have to pay? A) $425 B) $125C) $175 D) $300 E) None of the choices C) $175
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?A) Family need method B) Dual income, no kids method C) Formal calculation method D) Nonworking spouse method E) Easy method A) Family need method
Which of the following is NOT a type of permanent insurance? A) Cash valueB) Term life C) Whole life D) Straight life E) Ordinary life B) Term life
If you have a multiyear level term policy, A) Your premium will not increase when you renew it. B) You policy will continue for one year.C) Your premium will be the same for the duration of your policy. D) You can convert your policy to a permanent type at the end of the term. E) All of the choices are correct. C) Your premium will be the same for the duration of your policy.
If you have a conversion term policy, A) Your policy will have the same premium as other term policies. B) Your premium will not increase when you renew it. C) Your benefit to your beneficiary will be less as time passes.D) You can convert your term policy to a permanent policy. E) You can convert your policy from permanent to term at any time. D) You can convert your term policy to a permanent policy.
This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy. A) Limited paymentB) Multiyear level term C) Renewable term D) Conversion term E) Decreasing term B) Multiyear level term
Which of the following is NOT a feature of whole life insurance?A) The policy will return all premiums if you survive to the end of the policy. B) You can borrow from your cash value but must pay interest on the loan. C) The policy requires that you pay a specified premium each year for the rest of your life. D) It accumulates cash value. E) It provides both a death benefit and a savings component. A) The policy will return all premiums if you survive to the end of the policy.
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? A) You pay premiums each year for the rest of your life. B) You must pay interest on any loans. C) It is permanent life insurance.D) It builds cash value. E) It is more expensive than term insurance. D) It builds cash value.
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? A) Group life B) Limited life C) Universal lifeD) Variable life E) Adjustable life D) Variable life
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?A) Adjustable life B) Group life C) Universal life D) Variable life E) Limited life A) Adjustable life
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? A) Group lifeB) Universal life C) Variable life D) Limited life E) Adjustable life B) Universal life
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? A) Limited life B) Adjustable life C) Variable life D) Universal lifeE) Group life E) Group life
This life insurance is used to pay off certain debts, such as auto loans, in the event that you die before the debts are paid in full. Which of the following is not the best buy for the amount of protection offered for an individual? A) Adjustable life B) Endowment lifeC) Credit life D) Term E) Group life C) Credit life
Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force? A) Misstatement of age provisionB) Policy reinstatement C) Naming a beneficiary D) The grace period E) Incontestability clause B) Policy reinstatement
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?A) Misstatement of age provision B) The grace period C) Incontestability clause D) Policy reinstatement E) Naming a beneficiary A) Misstatement of age provision
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)? A) Naming a beneficiaryB) The grace period C) Misstatement of age provision D) Policy reinstatement E) Incontestability clause B) The grace period
Fred bought life insurance five years ago. He forgot to tell them that he had a heart condition, and, as a result of that condition, he recently died. Which of the following provisions prevents the life insurance company from refusing to pay his beneficiaries because of his original fraudulent misrepresentation? A) The grace period B) Naming a beneficiary C) Misstatement of age provision D) Policy reinstatementE) Incontestability clause E) Incontestability clause
Amy bought a life insurance policy and named Ben as her beneficiary. Amy still lives with her parents who provide some of her living expenses. She has since died. Who will receive the benefits from her policy?A) Ben. B) Ben’s beneficiaries. C) Her parents. D) Her contingent beneficiaries. E) None of these. A) Ben.
Bonnie is most concerned about being able to buy additional insurance without undergoing medical exams. Which of the following riders should she consider? A) Waiver of premium disability benefit B) Cost-of-living protectionC) Guaranteed insurability option D) Accidental death benefit E) Accelerated benefits C) Guaranteed insurability option
Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60. Which of the following riders should he consider? A) Cost-of-living protection B) Accelerated benefits C) Accidental death benefitD) Waiver of premium disability benefit E) Guaranteed insurability option D) Waiver of premium disability benefit
Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs? A) Cost-of-living protection B) Waiver of premium disability benefit C) Accelerated benefits D) Guaranteed insurability optionE) Accidental death benefit E) Accidental death benefit
A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider? A) Guaranteed insurability option B) Accelerated benefitsC) Cost-of-living protection D) Waiver of premium disability benefit E) Accidental death benefit C) Cost-of-living protection
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? A) Accidental death benefit B) Guaranteed insurability optionC) Accelerated benefits D) Waiver of premium disability benefit E) Cost-of-living protection C) Accelerated benefits
The settlement option that pays the life insurance proceeds in equal periodic installments for a specified number of years after your death is calledA) Limited installment payment. B) Proceeds left with the company. C) Lump-sum payment. D) Final life payment. E) Life income option. A) Limited installment payment.
The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives is calledA) Life income option. B) Lump-sum payment. C) Limited installment payment. D) Proceeds left with the company. E) Final life payment. A) Life income option.
The settlement option in which the company acts as trustee and pays interest to the beneficiary is calledA) Proceeds left with the company. B) Limited installment payment. C) Final life payment. D) Life income option. E) Lump-sum payment. A) Proceeds left with the company.
Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now? A) Term insurance B) Whole life insurance C) Universal life insurance D) Deferred annuityE) Immediate annuity E) Immediate annuity
Which of the following statements is incorrect? A) An immediate annuity allows an individual to receive income payments from an annuity beginning at once. B) A deferred annuity allows an individual to receive payments from an annuity at some future date.C) An annuity is more advisable for people in poor health than for those who are likely to live longer than average. D) An annuity is a financial contract written by an insurance company that provides you with regular income. E) A life insurance policy allows the beneficiary to receive proceeds at some future date. C) An annuity is more advisable for people in poor health than for those who are likely to live longer than average.
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? A) Whole insurance B) 401(k) C) Term insurance D) Variable annuityE) Fixed annuity E) Fixed annuity
When considering why to buy annuities, which of the following statements is correct? A) A fixed annuity is one where the investments put into the annuity are variable. B) It is better to fund a variable annuity before fully funding your IRA, Keogh, or 401(k).C) It is better to fully fund your IRA, Keogh, or 401(k) before buying an annuity. D) The timing for payments of a fixed annuity are variable. E) It is better to fund a fixed annuity before fully funding your IRA, Keogh, or 401(k). C) It is better to fully fund your IRA, Keogh, or 401(k) before buying an annuity.
Which of the following is a charge you will pay when you purchase a variable annuity? A) Mortality and expense risk charge. B) Administrative fee. C) Fund expense. D) Surrender charge.E) All of these. E) All of these.
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. A) $40,000 B) $400,000 C) $430,000 D) $280,000E) $196,000 E) $196,000
Holly and Matt want to use the “nonworking” spouse method to determine the amount of life insurance coverage they need. If their two children are ages 9 and 5 years old, how much do they need? A) $13,000 B) $50,000C) $130,000 D) $180,000 E) $18,000 C) $130,000
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? A) $86,000 B) $12,000C) $98,000 D) $217,000 E) $172,000 C) $98,000

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