Foundations in Personal Finance Chapter 9

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?

• You lose your cell phone

• Your identity gets stolen

• A medical emergency

• Car accident

Life insurance policy for a specific period of time is called:

• Universal

• Level

• Term

• Whole life

Which of the following is not a recommended way of lowering your car insurance premiums?

• Get good grades and take a driver education class

• Drop your auto insurance altogether

• Increase your deductible

• Shop around

The time between the disabling event and the beginning of payments in your disability coverage is called

• Deductible

• Out of pocket

• Elimination period

• Stop gap

The purpose of insurance is to:

• Develop a savings plan

• Transfer financial risk

• Provide an investment opportunity

• All of the above

Which of the following types of insurance is not recommended for a young single adult?

• Auto insurance

• Identity theft protection

• Health insurance

• Life insurance

Which of the following is not a recommended way to save on your health insurance premium?

• Increase your deductible.

• See if a Health Savings Account would make sense for your situation.

• If you are young and healthy, you do not need health insurance

• If you are young and healthy, you do not need health insurance

A person becomes self-insured when:

• Their kids are grown, they have no debt, and they have fully funded retirement

• They have no debt

• Everyone should have term life insurance regardless of age or financial well-being

• They own their own business

Which of the following statements about disability insurance is false?

• Disability insurance is not necessary if you have a good health insurance policy.

• A longer elimination period will lower your premium cost.

• After college, short-term disability should be covered by your emergency fund of three to six monthsʹ worth of expenses, staying out of debt, and having a money plan.

• Your coverage should be for 65% of your income.

Which of the following is not a benefit of having a will?

• A will enables you to nominate the persons who will handle your estate or serve as guardians to your children, and it allows you to determine who will receive all the property you have accumulated over your lifetime.

• A well-drafted will can allow your family to minimize death taxes and other costs that may drain your estate of assets.

• Your will can be an expression of your personal values.

• You only need a will if you have a large estate.