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Ch. 9 Test Review
Test Description: Test Prep
Instructions: Answer all questions to get your test result.
1) Which of the following would not be a huge financial risk (and, therefore would not require insurance) if you had a full emergency fund of $500 or more?
A
You lose your cell phone
B
A medical emergency
C
A car accident
D
Your identity gets stolen
2) The time between the disabling event and the beginning of payments in your disability coverage is called:
A
Out of pocket
B
Elimination period
C
Stop gap
D
Deductible
3) Life insurance policy for a specific period of time is called:
A
Level
B
Term
C
Universal
D
Whole life
4) The purpose of insurance is to:
A
Transfer financial risk
B
All of the above
C
Develop a savings plan
D
Provide an investment opportunity
5) Which of the following is not a recommended way of lowering your car insurance premiums?
A
Shop around
B
Increase your deductible
C
Get good grades and take a driver education class
D
Drop your auto insurance altogether
6) Which of the following types of insurance is not recommended for a young single adult?
A
Auto insurance
B
Identity theft protection
C
Life insurance
D
Health insurance
7) Which of the following is not a recommended way to save on your health insurance premium?
A
D) Increase your stop-loss or your maximum out-of-pocket expense.
B
B) See if a Health Savings Account would make sense for your situation.
C
C) If you are young and healthy, you do not need health insurance.
D
A) Increase your deductible.
8) A person becomes self-insured when:
A
D) They own their own business
B
C) Everyone should have term life insurance regardless of age or financial well-being
C
A) Their kids are grown, they have no debt, and they have fully funded retirement
D
B) They have no debt
9) 9) Which of the following is true?
A
D) Mortgage life insurance is necessary if you are a homeowner.
B
B) Pet insurance is a good idea since pet emergencies can be very expensive.
C
C) You can never be too safe-there is no bad insurance.
D
A) Any kind of duplicate insurance coverage is a bad idea.
10) 10) Which of the following statements about long-term care insurance is false?
A
B) At least 69% of people over the age of 65 will require long-term care at some point.
B
C) Long-term care insurance is not the same as disability or short-term medical care.
C
D) A good long-term care policy will include in-home care.
D
A) You should not buy long-term care insurance until age 30.
11) 11) Which of the following statements about disability insurance is false?
A
A) Disability insurance is not necessary if you have a good health insurance policy.
B
C) Your coverage should be for 65% of your income.
C
D) After college, short-term disability should be covered by your emergency fund of three to six monthsʹ worth of expenses, s
D
B) A longer elimination period will lower your premium cost.
12) 12) Which of the following statements about life insurance is true?
A
D) You will always need life insurance.
B
B) Cash value insurance is normally for life and is more expensive than term life insurance because it funds a savings plan
C
C) There is no difference between term and cash value life insurance.
D
A) Term life insurance should be avoided because the policy will expire and it has no savings plan built into it.
13) 13) Which of the following is not a benefit of having a will?
A
C) Your will can be an expression of your personal values.
B
A) A will enables you to nominate the persons who will handle your estate or serve as guardians to your children, and it allo
C
B) A well-drafted will can allow your family to minimize death taxes and other costs that may drain your estate of assets.
D
D) You only need a will if you have a large estate.
14) 14) Which of the following policies would be a duplicate coverage for your health insurance policy?
A
B) Cancer and hospital indemnity insurance
B
A) Long-term care insurance
C
C) Auto insurance
D
D) Disability insurance
15) You are involved in a two-car accident in which you are at fault. The other driver is injured and your insurance covers the medical expenses of the victim. This type of insurance coverage is called:
A
Comprehensive
B
Uninsured motorist protection
C
Collision
D
Liability
16) 16) Comprehensive coverage takes care of damage to your car that is not caused by a collision.
A
False
B
True
17) After high school, you should have the following types of insurance: auto, renterʹs, health and long-term care insurance.
A
True
B
False
18) 18) Following the Five Foundations will help you to, one day, become self-insured.
A
True
B
False
19) Renterʹs insurance is not necessary if you donʹt have a lot of expensive things.
A
False
B
True
20) Prepaid burial policies are a good idea.
A
False
B
True
*select an answer for all questions
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