Deck 9: Risk Management: the Role of Insurance

Question 1

Which of the following is available to those who are age 65 or older?

A) Medicaid.
B) Medicare.
C) State Children's Health Insurance.
D) Affordable Care Act.

Answer 1

Medicare.

Question 2

Which of the following factors affects your health the most?

A) Health behavior.
B) Social circumstances.
C) Genetic disposition.
D) Medical care.

Answer 2

Health behavior.

Question 3

Which of the following refers to the cost of the insurance?

A) Transfer risk.
B) Deductible.
C) Premium.
D) Copayment.

Answer 3

Premium.

Question 4

What should you do if the severity of risk is high and the frequency of the risk event occurring is medium?

A) Purchase insurance.
B) Accept the risk.
C) Avoid the risk.
D) Manage the risk.

Question 5

Which of the following refers to a cost-sharing amount with the insurance company?

A) Transfer risk.
B) Deductible.
C) Premium.
D) Copayment.

Question 6

How does risk affect insurance premiums?

A) As risk increases, premiums increase.
B) As risk increases, premiums decrease.
C) As risk decreases, premiums increase.
D) Risk doesn't affect premiums.

Question 7

What percent of young adults will visit a doctor one to three times a year?

A) 50%.
B) 40%.
C) 30%.
D) 25%.

Question 8

Which of the following refers to the amount that you must pay on a claim before insurance comes into play?

A) Transfer risk.
B) Deductible.
C) Premium.
D) Copayment.

Question 9

Which government entity has provided subsidized flood insurance to persons living in areas that have a history of flooding?

A) Government Employees Insurance Company (GEICO).
B) Old Age, Survivors, and Disability Insurance (OASDI).
C) Federal Emergency Management Agency (FEMA).
D) Federal Home Loan Mortgage Corporation (FHLMC).

Question 10

Which of the following is a financial tool that allows individuals to manage the unpredictable and potentially excessive costs associated with healthcare?

A) Health insurance.
B) Life insurance.
C) Disability insurance.
D) PAP insurance.

Question 11

Which of the following refers to compensating individuals only up to the value of their loss?

A) Premium.
B) Indemnity.
C) Deductible.
D) Copayment.

Question 12

What should you do if the severity of risk is medium and the frequency of the risk event occurring is medium?

A) Purchase insurance.
B) Accept the risk.
C) Avoid the risk.
D) Manage the risk.

Question 13

What percent of young adults visit the emergency room each year?

A) 5%.
B) 10%.
C) 20%.
D) 25%.

Question 14

What percent of young adults will have more than 10 visits to a doctor or hospital during the year?

A) 5%.
B) 10%.
C) 20%.
D) 25%.

Question 15

What should you do if the severity of risk is high and the frequency of the risk event occurring is high?

A) Purchase insurance.
B) Accept the risk.
C) Avoid the risk.
D) Manage the risk.

Question 16

What should you do if the severity of risk is high and the frequency of the risk event occurring is low?

A) Purchase insurance.
B) Accept the risk.
C) Avoid the risk.
D) Manage the risk.

Question 17

What should you do if the severity of risk is low and the frequency of the risk event occurring is high?

A) Purchase insurance.
B) Accept the risk.
C) Avoid the risk.
D) Manage the risk.

Question 18

Which of the following is a way people transfer risk of loss to another party?

A) Insurance.
B) Risk avoidance.
C) Premium.
D) Copayment.

Question 19

Which of the following factors affects your health the least?

A) Health behavior.
B) Social circumstances.
C) Genetic disposition.
D) Medical care.

Question 20

Which of the following is a factor that determines your health?

A) Health behavior.
B) Social circumstances.
C) Genetic disposition.
D) All of these answer choices are correct.

Question 21

Mia's gross income is $50,000 per year. How much long-term disability insurance should she purchase?

A) $50,000.
B) $25,000.
C) $32,500.
D) $20,000.

Question 22

Which of the following will replace a portion of your salary for 3, 6, or 12 months if you cannot work?

A) Social Security.
B) Short-term disability insurance.
C) Long-term disability insurance.
D) Health insurance.

Question 23

Which of the following is the amount that the insured individual must pay before the health insurance company will contribute any funds to pay the medical bills?

A) Premium.
B) Copayment.
C) Deductible.
D) Coinsurance.

Question 24

What percent of Americans could pay their bills or meet expenses if they were to become disabled and not return to work?

A) 50%.
B) 40%.
C) Less than 40%
D) Less than 20%.

Question 25

How many Social Security disability benefit credits per year can you earn for every year worked?

A) 2.
B) 3.
C) 4.
D) 5.

Question 26

Which type of disability insurance should you purchase?

A) Any occupation.
B) Own occupation.
C) Modified-own occupation disability.
D) Own occupation or modified-own occupation disability.

Question 27

Which of the following is the prorated sharing of costs between the insured individual and the health insurance company?

A) Premium.
B) Copayment.
C) Deductible.
D) Coinsurance.

Question 28

Which of the following refers to the amount of time between the disability occurring and the insurance company paying the claim?

A) Any occupation.
B) Own occupation.
C) Modified-own occupation disability.
D) Elimination period.

Question 29

Which of the following provides free or low-cost insurance for children in working families with low to moderate income?

A) Medicaid.
B) Medicare.
C) State Children's Health Insurance.
D) Affordable Care Act.

Question 30

Which of the following is a requirement of a disability as defined by the Social Security Administration?

A) You cannot do the work you did before an accident or illness.
B) You cannot readjust your skills because of your medical condition.
C) Your disability has or is expected to last for at least one year or until death.
D) All of these answer choices are correct.

Question 31

Which of the following is a popular form of managed care?

A) Point of service plan.
B) Preferred provider organization.
C) Fee-for-service plan.
D) Health maintenance organization.

Question 32

Which of the following is the most flexible, and costly, type of coverage available?

A) Insurance.
B) Managed care plan.
C) Fee-for-service plan.
D) Health maintenance organization.

Question 33

Which of the following is a state-administered health insurance designed to provide coverage for individuals and families with low incomes and limited financial assets?

A) Medicaid.
B) Medicare.
C) State Children's Health Insurance.
D) Affordable Care Act.

Question 34

Which of the following provides care through a network of physicians and hospitals located in a specified geographic area?

A) Insurance.
B) Preferred provider organization.
C) Fee-for-service plan.
D) Health maintenance organization.

Question 35

Which of the following is a type of coverage designed to reduce yearly premiums by providing an incentive to the insured to pay more upfront medical expense out of pocket?

A) Consumer-driven plan.
B) Preferred provider organization.
C) Fee-for-service plan.
D) Health maintenance organization.

Question 36

Which of the following will replace a portion of your salary after you cannot work for 6−12 months?

A) Social Security.
B) Short-term disability insurance.
C) Long-term disability insurance.
D) Health insurance.

Question 37

Which of the following allows the insured to use the services of different hospitals, clinics, and doctors without prior permission?

A) Insurance.
B) Managed care plan.
C) Fee-for-service plan.
D) Health maintenance organization.

Question 38

Which of the following types only includes the use of doctors, specialists, clinics, and hospitals in the plan's network?

A) Exclusive provider organization.
B) Preferred provider organization.
C) Fee-for-service plan.
D) Health maintenance organization.

Question 39

How many credits are required to be qualified for Social Security disability benefits?

A) 5.
B) 10.
C) 15.
D) 20.

Question 40

Which of the following means that you will be considered disabled if you are unable to perform the material and substantial duties of your occupation?

A) Any occupation.
B) Own occupation.
C) Unable to work.
D) Modified-own occupation disability.

Question 41

Max's gross income is $70,000 per year. He has a long-term care disability policy. How much does he need in his emergency fund to cover short-term expenses?

A) $70,000.
B) $35,000.
C) $45,500.
D) $22,750.

Question 42

Which of the following is a type of life insurance?

A) Health insurance.
B) Term-life insurance.
C) Cash-value life insurance.
D) Both term-life insurance and cash-value life insurance.

Question 43

Max's gross income is $30,000 per year. How much long-term disability insurance should he purchase?

A) $30,000.
B) $25,000.
C) $20,000.
D) $19,500.

Question 44

Which of the following provides a death benefit if the insured individual dies before reaching a predetermined age?

A) Health insurance.
B) Term-life insurance.
C) Cash-value life insurance.
D) Both term-life insurance and cash-value life insurance.

Question 45

Which of the following refers to the person who makes premium payments?

A) Policy owner.
B) Insured.
C) Insurable interest.
D) Beneficiary.

Question 46

Which of the following refers to the person who receives the policy death benefit when the insured dies?

A) Policy owner.
B) Insured.
C) Insurable interest.
D) Beneficiary.

Question 47

Which of the following is a significant disadvantage of a cash-value policy?

A) Provides the ability to leave a sum of money to a charity or family members on a tax-free basis.
B) Preserves insurability.
C) Provides estate liquidity.
D) Costs more than term policies.

Question 48

Which of the following refers to individuals who will receive the death benefit if the primary beneficiary dies before the policy owner?

A) Policy owner.
B) Insured.
C) Insurable interest.
D) Contingent beneficiary.

Question 49

Which of the following ensures that your policy premiums will be paid if you were to become disabled?

A) Disability premium waiver.
B) Value provision.
C) Convertibility provision.
D) Guaranteed renewability provision.

Question 50

Which of the following permits you to extend your policy without having to take a medical exam?

A) Disability premium waiver.
B) Value provision.
C) Convertibility provision.
D) Guaranteed renewability provision.

Question 51

Which of the following pays a higher return?

A) Annual renewable term insurance.
B) Term-life insurance.
C) Whole life insurance.
D) Universal life insurance.

Question 52

Which of the following means that if the insured individual were to die unexpectedly, the policy owner would suffer a financial loss?

A) Policy owner.
B) Capital loss.
C) Insurable interest.
D) Beneficiary.

Question 53

Jorge's gross income is $80,000 per year. He has a long-term care disability policy. How much does he need in his emergency fund to cover short-term expenses?

A) $80,000.
B) $40,000.
C) $26,000.
D) $52,000.

Question 54

Jorge's gross income is $80,000 per year. How much long-term disability insurance should he purchase?

A) $50,000.
B) $60,000.
C) $52,000.
D) $80,000.

Question 55

Mia's gross income is $50,000 per year. She has a long-term care disability policy. How much does she need in her emergency fund to cover short-term expenses?

A) $50,000.
B) $25,000.
C) $32,500.
D) $16,250.

Question 56

Which of the following refers to the person who must die for the life insurance policy to pay off?

A) Policy owner.
B) Insured.
C) Insurable interest.
D) Beneficiary.

Question 57

Which of the following needs to be purchased yearly?

A) Annual renewable term insurance.
B) Term-life insurance.
C) Cash-value life insurance.
D) Level term insurance.

Question 58

Which of the following earns a fixed rate of return?

A) Annual renewable term insurance.
B) Term-life insurance.
C) Whole life insurance.
D) Universal life insurance.

Question 59

Which of the following allows you to convert a cash-value policy in the future without having to provide proof of insurability?

A) Disability premium waiver.
B) Value provision.
C) Convertibility provision.
D) Guaranteed renewability provision.

Question 60

Which of the following allows you to invest the cash value in mutual funds?

A) Variable life insurance.
B) Term-life insurance.
C) Universal life insurance.
D) Whole life insurance.

Question 61

Which of the following is intended to pay for damage to your vehicle caused by an event, such as a tree falling on the parked car?

A) Collision coverage.
B) Liability coverage.
C) Comprehensive coverage.
D) All of these answer choices are correct.

Question 62

Which of the following is more expensive with higher coverage?

A) Gap coverage.
B) Liability coverage.
C) Comprehensive coverage.
D) All of these answer choices are correct

Question 63

Which of the following is a characteristic of a personal automobile policy?

A) Pays medical expenses and property damages to others harmed in the accident you caused.
B) Provides a financial safety net in case you are at fault in causing significant physical, bodily, or emotional harm to others.
C) Provides a financial safety net in case an uninsured or underinsured driver causes you significant financial loss from a car accident.
D) All of these answer choices are correct.

Question 64

Which of the following is an example of an event that could trigger a comprehensive claim?

A) Hail storm.
B) Broken windshield.
C) Vandalism.
D) All of these answer choices are correct.

Question 65

Which of the following refers to the cost of insurance?

A) Premium.
B) Deductible.
C) Comprehensive coverage.
D) Liability coverage.

Question 66

Which of the following is a factor that increases your premium?

A) Being male.
B) Being younger than age 25.
C) Living in a city.
D) All of these answer choices are correct.

Question 67

Which of the following is a factor that decreases your premium?

A) Being male.
B) Being younger than age 25.
C) Living in a city.
D) Being a good student.

Question 68

Which of the following requires you to pay the policy deductible when you make a claim?

A) Collision coverage.
B) Liability coverage.
C) Liability coverage and comprehensive coverage.
D) Collision coverage and comprehensive coverage.

Question 69

Which of the following is intended to pay for your car's repairs when involved in a moving vehicle accident?

A) Collision coverage.
B) Liability coverage.
C) Comprehensive coverage.
D) All of these answer choices are correct.

Question 70

Which of the following is intended to pay for medical costs, funeral expenses, lost wages, punitive damages, car rentals, repairs, and compensation for pain and suffering for people in the other car involved in an accident?

A) Collision coverage.
B) Liability coverage.
C) Comprehensive coverage.
D) All of these answer choices are correct.

Question 71

Which of the following is a situation or condition that makes the probability of a peril occurring more likely?

A) Outcome.
B) Hazard.
C) Event.
D) Liability.

Question 72

Which of the following refers to the amount you must pay before the insurance company makes a payment on a claim?

A) Premium.
B) Deductible.
C) Comprehensive coverage.
D) Liability coverage.

Question 73

What should you do if the severity of a risk is high and the frequency of the risk event occurring is high?

A) Avoid the risk.
B) Manage the risk.
C) Purchase insurance.
D) Accept the risk.

Question 74

Which of the following insures the amount between what you owe on your car and what the car is worth?

A) Collision coverage.
B) Liability coverage.
C) Gap coverage.
D) Uninsured/underinsured motorist coverage.

Question 75

Which of the following is anything that causes you to experience a loss?

A) Peril.
B) Hazard.
C) Event.
D) Liability.

Question 76

Which of the following insures you, your family, passengers, and others who drive your car with permission?

A) Collision coverage.
B) Liability coverage.
C) Comprehensive coverage.
D) All of these answer choices are correct.

Question 77

Which of the following is a factor that increases your premium?

A) Using your car for commuting to school/work.
B) Having a good driving record.
C) Having a high credit score.
D) Taking a defensive driving course.

Question 78

Which of the following will provide additional coverage that will pay your medical and property damage expenses above what someone else's policy pays?

A) Collision coverage.
B) Liability coverage.
C) Comprehensive coverage.
D) Uninsured/underinsured motorist coverage.

Question 79

Which of the following is an example of a peril?

A) A hail storm caused damage to your home.
B) You live on the beach.
C) Your drive a long commute.
D) You smoke.

Question 80

Which of the following is a factor to consider when it comes to buying insurance?

A) The perils that you face as a homeowner or tenant.
B) The probability of loss occurring.
C) Your budget and how much you can spend on insurance premiums.
D) All of these answer choices are correct.