Financial Planning II 1.04

Anna is an insurance agent who is working with Tracy, the sole proprietor of a small dental practice, to determine the type of liability insurance she needs. Anna suggests that Tracy needs to purchase insurance that will cover her legal expenses in the event a patient sues her for negligence. What type of liability insurance is Anna advising Tracy to purchase?

• workers' compensation

• commercial

• malpractice

• healthcare

The insurance industry generates the funds needed to pay the claims of policyholders by:

• obtaining loans from financial institutions

• investing money from premiums

• consolidating stock portfolios

• selling related merchandise

Paulo is a terrible driver and has had many traffic tickets and accidents. What type of insurance will his insurance company have to get for Paulo?

• reinsurance

• excess insurance

• standard insurance

• exclusion insurance

In addition to basic homeowner's insurance coverage, insurance agents whose clients live in flood or earthquake zones might suggest that they purchase:

• optional perils endorsements

• assisted living coverage

• rental unit coverage

• limited term riders

Bella owns a collection of rare comic books that increase in value every year. She wants to insure them for more than their present value. Bella should purchase:

• reinsurance

• excess insurance

• standard insurance

• exclusion insurance

If a car in the driveway of a home gets broken into and a laptop is stolen, what type of insurance coverage will pay for the laptop?

• reinsurance

• auto insurance

• excess insurance

• property insurance

Insurance that an insurance company purchases from another insurance company to protect itself from the risk of a major claims event is called:

• reinsurance

• excess insurance

• standard insurance

• exclusion insurance

What is the disadvantage to members who have health insurance coverage through a health maintenance organization (HMO)?

• HMOs typically lack coverage for well-patient visits or preventive care

• Members pay much higher deductibles than do people with other coverage

• Members need to get referrals from their primary care doctor to see specialists

• HMOs require the insured individuals to pay high co-pays to network physicians

A primary characteristic of a whole life insurance policy is that it:

• requires policyholders to pay low premiums annually

• covers the insured for a time period of 25 years

• covers only the insured's burial expenses

• accumulates cash value over time

A large company that provides insurance and assumes the risk covered in the policies is known as a/an:

• insurance agent

• insurance carrier

• insurance adjuster

• reinsurance company