Weeks 5 & 6 Quiz

Question 1

T/F: Risk avoidance is an effective way to handle small exposures to loss when the cost of insurance is too expensive.

Answer 1

False

Question 2

T/F: Avoiding alcoholic beverages while driving is an example of loss prevention.

Answer 2

True

Question 3

T/F: Life insurance proceeds paid to your heirs are NOT generally subject to state or federal income taxes.

Answer 3

True

Question 4

T/F: The need for life insurance increases with children.

Answer 4

True

Question 5

T/F: Your need for additional life insurance can be determined by looking at the difference between your family’s available financial resources after your death and your family’s total economic needs.

Answer 5

True

Question 6

T/F: Underwriters use life expectancy figures to look at overall longevity for various age groups and also consider specific factors related to an applicant’s health.

Answer 6

True

Question 7

T/F: Term insurance is generally the most economical form of life insurance for young people.

Answer 7

True

Question 8

T/F: The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

Answer 8

True

Question 9

T/F: A life insurance policy allows the owner to name both a primary beneficiary and contingent beneficiaries.

Answer 9

True

Question 10

Which of the following statements regarding risk avoidance is true?
Risk avoidance is an effective way to handle many types of potentially small exposures to loss when insurance would be too expensive.
Risk avoidance is any activity that lessens the severity of loss once it occurs.
Risk avoidance is any activity that increases the chance that a loss will occur.
Risk avoidance is an act that reduces the probability that a loss will occur.
Risk avoidance is any activity that helps evade an act that creates a risk.

Answer 10

Risk avoidance is any activity that helps evade an act that creates a risk.

Question 11

The preferred technique for determining how much life insurance coverage is needed for an individual is to:

Answer 11

assess the family’s total economic needs and subtract the financial resources that would be available after death to meet those needs.

Question 12

Ashlyn is 40 years old and earns $35,000 annually. The multiple-of-earnings method used to determine the amount of life insurance coverage needed for an individual shows that she should have 6.5 times her earnings. How much insurance should Ashlyn have?

Answer 12

$227,500

Question 13

Which of the following is NOT likely to be denied coverage or charged a higher premium for life insurance?
A 35-year-old woman who has DUI charges on her driving record
An obese 37-year-old smoker
A 40-year-old man with a very large family
A 30-year-old man who enjoys hang gliding
A 45-year-old NASCAR driver with excellent health

Answer 13

A 40-year-old man with a very large family

Question 14

Features of term life insurance include all of the following EXCEPT:

Answer 14

a savings feature that builds up through time.

Question 15

Tanisha died with a $200,000 life insurance policy. Her husband, Shemar, is the primary beneficiary, and their children, Mimi (age 24) and Imani (age 30), are the contingent beneficiaries. All three survive Tanisha. How will the policy proceeds be distributed?

Answer 15

$200,000 to Shemar

Question 16

T/F: Large employers are less likely to offer health insurance to their employees than small employers.

Answer 16

False

Question 17

T/F: You would have a better chance of insurance coverage for medical services not provided by the network with a preferred provider organization (PPO) than with a health maintenance organization (HMO) plan.

Answer 17

True

Question 18

Which of the following best describes Medicare?

Answer 18

Medicare is primarily designed for people 65 and over and for people under 65 who receive Social Security disability benefits.

Question 19

Long-term care is a term used to describe:

Answer 19

the delivery of medical and personal care to persons with chronic medical conditions who are not in a hospital.

Question 20

T/F: Property inventories are important to identify insurance needs and to substantiate claims.

Answer 20

True

Question 21

T/F: Floods are covered under most homeowner’s insurance policies.

Answer 21

False

Question 22

T/F: The building where Lukas was renting an apartment burned to the ground. The landlord’s insurance on the structure will cover the loss of Lukas’s property that was in his apartment.

Answer 22

False

Question 23

T/F: A $100,000/$300,000 bodily injury liability automobile policy could pay up to $100,000 to one person or up to $300,000 to all injured victims in an accident.

Answer 23

True

Question 24

An increase in the amount of the deductible will:

Answer 24

decrease the amount of insurance premiums.

Question 25

Comprehensive automobile coverage refers to:

Answer 25

coverage for damage to an insured automobile from perils (with a few exceptions) other than collision.

Question 26

It pays to comparison shop for insurance policies because of the:

Answer 26

large variations in premiums and services.

Question 27

At the scene of an accident, the police are responsible only for assessing the:

Answer 27

probability of a law violation.