Ch 1

Question 1

What are additional goals of financial planning?

Answer 1

1) pay off debt
2) buy a home or another major asset
3) fund college expenses
4) accumulate wealth
5) save for retirement
6) distribute assets after death

Question 2

What are the five planning techniques in a comprehensive financial plan?

Answer 2

1) risk management planning
2) savings and investment planning
3) tax planning
4) retirement planning
5) estate planning

Question 3

What are two types of loss exposures not handled by insurance?

Answer 3

1) retirement loss exposure

2) unemployment loss exposure

Question 4

What are three types of social insurance?

Answer 4

1) Social Security/Medicare
2) Medicaid
3) Unemployment

Question 5

How are unemployment programs funded?

Answer 5

Through a combination of taxes, employer-paid premiums, and contributions from the Federal government

Question 6

What are the seven steps in the personal financial planning process?

Answer 6

Every good Apple is definitely in motion

1) Establish and prioritize personal financial goals
2) Gather information (current financial standing and attitudes)
3) Analyze the current situation (how does my financial status and my qualitative characteristics affect my goal?)
4) identify and evaluate alternatives
5) develop a plan
6) implement the plan
7) monitor and revise the plan (financial status, priorities, and goals may change)

Question 7

What are the two basic goals of personal financial planning?

Answer 7

1) Provide for basic needs

2) Protect against loss of income due to illness, injury, or death

Question 8

During the retirement phase, what does risk management refocus on?

Answer 8

Health costs

Question 9

What is the major source of health insurance in the USA?

Answer 9

Employee-sponsored health insurance

Question 10

By 2027, what will the social security full retirement age be?

Answer 10

67