Understanding Insurance and Finance Terms

What is the term for the amount of money an individual pays periodically to an insurance company to maintain coverage?

• Deductible

• Premium

• Policy

• Dividend

Which of the following best describes a deductible in an insurance policy?

• The total amount paid by the insurer

• The amount the policyholder pays out-of-pocket before insurance covers the rest

• The monthly payment to keep the policy active

• The interest earned on the policy

What is a policy in the context of insurance?

• A type of investment account

• A contract between the insurer and the insured

• The interest rate charged on loans

• A method of saving for retirement

Which of the following is an example of a long-term investment?

• Buying groceries

• Purchasing a car

• Investing in stocks for retirement

• Paying monthly rent

What is the main difference between simple interest and compound interest?

• Simple interest is calculated on the principal only, while compound interest is calculated on the principal and accumulated interest

• Simple interest is always higher than compound interest

• Compound interest is only used for loans

• Simple interest requires monthly payments

Which of the following best describes phishing?

• A method of saving money

• A type of insurance policy

• A fraudulent attempt to obtain sensitive information by pretending to be a trustworthy entity

• A way to invest in the stock market

If you want to save for retirement, which of the following would be the most appropriate action?

• Spend all your income each month

• Invest in a retirement account such as a 401(k) or IRA

• Only use cash for purchases

• Avoid all forms of insurance

A credit card skimming device is most likely to be found in which of the following locations?

• At a bank teller’s desk

• On an ATM or gas station card reader

• In a government office

• At a grocery store checkout operated by a cashier

If you invest $1,000 at an annual simple interest rate of 5% for 3 years, how much interest will you earn?

• $50

• $100

• $150

• $200

Which of the following actions can help protect you from phishing attacks?

• Clicking on all email links

• Sharing your passwords with friends

• Verifying the sender’s email address before responding

• Ignoring software updates