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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
A medical emergency
B
A car accident
C
You lose your cell phone
D
Your identity gets stolen
2) The time between the disabling event and the beginning of payments in your disability coverage is called:
A
Elimination period
B
Out of pocket
C
Stop gap
D
Deductible
3) Life insurance policy for a specific period of time is called:
A
Term
B
Level
C
Universal
D
Whole life
4) The purpose of insurance is to:
A
Provide an investment opportunity
B
Transfer financial risk
C
Develop a savings plan
D
All of the above
5) Which of the following is not a recommended way of lowering your car insurance premiums?
A
Increase your deductible
B
Shop around
C
Drop your auto insurance altogether
D
Get good grades and take a driver education class
6) Which of the following types of insurance is not recommended for a young single adult?
A
Life insurance
B
Auto insurance
C
Identity theft protection
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
B) They have no debt
B
A) Their kids are grown, they have no debt, and they have fully funded retirement
C
D) They own their own business
D
C) Everyone should have term life insurance regardless of age or financial well-being
9) 9) Which of the following is true?
A
A) Any kind of duplicate insurance coverage is a bad idea.
B
D) Mortgage life insurance is necessary if you are a homeowner.
C
C) You can never be too safe-there is no bad insurance.
D
B) Pet insurance is a good idea since pet emergencies can be very expensive.
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
D) A good long-term care policy will include in-home care.
C
A) You should not buy long-term care insurance until age 30.
D
C) Long-term care insurance is not the same as disability or short-term medical care.
11) 11) Which of the following statements about disability insurance is false?
A
C) Your coverage should be for 65% of your income.
B
A) Disability insurance is not necessary if you have a good health insurance policy.
C
B) A longer elimination period will lower your premium cost.
D
D) After college, short-term disability should be covered by your emergency fund of three to six monthsʹ worth of expenses, s
12) 12) Which of the following statements about life insurance is true?
A
D) You will always need life insurance.
B
A) Term life insurance should be avoided because the policy will expire and it has no savings plan built into it.
C
C) There is no difference between term and cash value life insurance.
D
B) Cash value insurance is normally for life and is more expensive than term life insurance because it funds a savings plan
13) 13) Which of the following is not a benefit of having a will?
A
B) A well-drafted will can allow your family to minimize death taxes and other costs that may drain your estate of assets.
B
C) Your will can be an expression of your personal values.
C
D) You only need a will if you have a large estate.
D
A) A will enables you to nominate the persons who will handle your estate or serve as guardians to your children, and it allo
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
Liability
B
Collision
C
Comprehensive
D
Uninsured motorist protection
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
False
B
True
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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