Insurance Knowledge Assessment Flashcard

Front

Emma is considering purchasing a life insurance policy. Which of the following is a characteristic of term life insurance? It provides coverage for a specific period.

Back

It provides coverage for a specific period.

Front

Evelyn was driving her car when she accidentally hit a tree. What is the primary purpose of collision coverage in her auto insurance?

Back

To cover damages to your own vehicle in an accident.

Front

Which type of health insurance plan typically requires choosing a primary care physician and getting referrals to see specialists?

Back

Health Maintenance Organization (HMO)

Front

How does a Roth IRA differ from a traditional IRA in terms of tax treatment?

Back

Withdrawals from a Roth IRA are tax-free if certain conditions are met.

Front

What is one of the main benefits of purchasing an annuity?

Back

Guaranteed lifetime income.

Front

Priya is considering buying life insurance. She wants to know about the premiums of term life insurance and whole life insurance. Which is generally true?

Back

Whole life insurance premiums are higher than term life insurance premiums.

Front

Grace is considering adjusting her auto insurance policy. Evaluate the impact of increasing her auto insurance deductible on her premium.

Back

It decreases the premium.

Front

Emma is considering withdrawing funds from her traditional IRA before she turns 59½. Analyze the potential tax implications of this decision.

Back

Subject to ordinary income tax and a 10% penalty.

Front

Nora is considering her options for health insurance. Which of the following is a strategic reason for her to choose a high-deductible health plan (HDHP)?
Options:
To avoid paying any premiums.
To qualify for a Health Savings Account (HSA).
To have unlimited access to specialists.
To receive immediate coverage for all medical expenses.

Back

To qualify for a Health Savings Account (HSA).

Front

What is a key difference between fixed and variable annuities?

Back

Fixed annuities provide a guaranteed interest rate.