Ch. 9 Test Review: Question Preview (ID: 29705)

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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) Your identity gets stolen
d) A car accident

The time between the disabling event and the beginning of payments in your disability coverage is called:
a) Deductible
b) Out of pocket
c) Elimination period
d) Stop gap

Life insurance policy for a specific period of time is called:
a) Universal
b) Level
c) Term
d) Whole life

The purpose of insurance is to:
a) Develop a savings plan
b) Transfer financial risk
c) Provide an investment opportunity
d) All of the above

Which of the following is not a recommended way of lowering your car insurance premiums?
a) Get good grades and take a driver education class
b) Drop your auto insurance altogether
c) Increase your deductible
d) Shop around

Which of the following types of insurance is not recommended for a young single adult?
a) Auto insurance
b) Identity theft protection
c) Health insurance
d) Life insurance

Which of the following is not a recommended way to save on your health insurance premium?
a) A) Increase your deductible.
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) D) Increase your stop-loss or your maximum out-of-pocket expense.

A person becomes self-insured when:
a) A) Their kids are grown, they have no debt, and they have fully funded retirement
b) B) They have no debt
c) C) Everyone should have term life insurance regardless of age or financial well-being
d) D) They own their own business

9) Which of the following is true?
a) A) Any kind of duplicate insurance coverage is a bad idea.
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) D) Mortgage life insurance is necessary if you are a homeowner.

10) Which of the following statements about long-term care insurance is false?
a) A) You should not buy long-term care insurance until age 30.
b) B) At least 69% of people over the age of 65 will require long-term care at some point.
c) C) Long-term care insurance is not the same as disability or short-term medical care.
d) D) A good long-term care policy will include in-home care.

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) B) A longer elimination period will lower your premium cost.
c) C) Your coverage should be for 65% of your income.
d) D) After college, short-term disability should be covered by your emergency fund of three to six monthsʹ worth of expenses, s

12) Which of the following statements about life insurance is true?
a) A) Term life insurance should be avoided because the policy will expire and it has no savings plan built into it.
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) D) You will always need life insurance.

13) Which of the following is not a benefit of having a will?
a) A) A will enables you to nominate the persons who will handle your estate or serve as guardians to your children, and it allo
b) B) A well-drafted will can allow your family to minimize death taxes and other costs that may drain your estate of assets.
c) C) Your will can be an expression of your personal values.
d) D) You only need a will if you have a large estate.

14) Which of the following policies would be a duplicate coverage for your health insurance policy?
a) A) Long-term care insurance
b) B) Cancer and hospital indemnity insurance
c) C) Auto insurance
d) D) Disability insurance

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) Collision
c) Liability
d) Uninsured motorist protection

16) Comprehensive coverage takes care of damage to your car that is not caused by a collision.
a) True
b) False

After high school, you should have the following types of insurance: auto, renterʹs, health and long-term care insurance.
a) True
b) False

18) Following the Five Foundations will help you to, one day, become self-insured.
a) True
b) False

Renterʹs insurance is not necessary if you donʹt have a lot of expensive things.
a) True
b) False

Prepaid burial policies are a good idea.
a) True
b) False

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