Sarah has a health insurance policy that has a copayment for each doctor's visit.
Which of the following is true for Sarah? a.)
Sarah is responsible for 100% of the expenses associated with each doctor visit. b.)
Sarah isn't responsible for any of the expenses associated with each doctor visit. c.)
Sarah's doctor is responsible for all the expenses associated with each of her visits. d.)
Sarah is responsible for only a portion of the expenses associated with each doctor visit.
n which of the following scenarios is the person paying an insurance deductible? a.)
Kenneth pays 15% of his insurance costs and his employer pays the remaining 85%. b.)
Leanza pays a standard rate of $20 every time she has a doctor's appointment, while her insurance pays the remaining amount. c.)
Alice pays $200 toward her health insurance every month and her employer pays the remaining balance. d.)
Marcus must pay a total of $600 toward his medical costs before his insurance will begin to assist him with the payments.
Which of the following conditions indicates that an individual should buy less disability coverage or could go without buying disability insurance?
CHALLENGE 1
a.)
When an individual has high debt b.)
When an individual has few assets c.)
When an individual has a high net worth d.)
When an individual has a single source of income
Evan's family consists of his wife, Emma, and their two children. He has a life insurance policy in which Emma is named the beneficiary.
Which of the following statements is true of the given situation? a.)
Emma receives the policy death benefit if Evan dies. b.)
Evan receives the policy death benefit if Emma dies. c.)
Evan and Emma receive the policy death benefit if either of their children dies. d.)
Emma is the owner of the insurance policy and is responsible for paying the premium.
Which of the following is a feature of collision insurance coverage? a.)
The policy pays the repair bills of all the vehicles involved in an accident. b.)
The policy covers the medical expenses of all injured people in the insured vehicle at the time of the accident. c.)
The policy covers the funeral expenses of the individuals who die in an accident while traveling in the insured vehicle.
d.)
The policy pays for the repair of the policyholder's vehicle if the damage is caused by an accident
Which of the following results in a lower premium on a homeowner's insurance policy (HO policy)?
a.)
The premium decreases if a policyholder is willing to pay more out of their pocket should a peril occur.
b.)
The premium decreases if the policyholder is insuring an old ancestral property.
c.)
The premium decreases if the policy carries a large liability coverage in the event of a peril.
d.)
The premium decreases if the policyholder has a low credit score.
Jayden is 52 years old and has recently been diagnosed with dementia. Jayden knows he will not be able to take care of himself in the coming years.
Which type of insurance coverage should Jayden buy to help him with everyday self-care needs at home?
a.) Medicaid
b.) Life insurance
c.) Health insurance
d.)
Long-term care insurance
CHALLENGE 2
Which of the following people is likely to have the highest required retirement savings rate, if each plans to retire at age 65? a.)
Floyd, who earns $40,000 a year and began saving for retirement at age 20 b.) Brooke, who earns $45,000 a year and began saving for retirement at age 25 c.)
Emily, who earns $65,000 a year and began saving for retirement at age 35 d.)
Julio, who earns $78,000 a year and began saving for retirement at age 50
Which of the following people can withdraw earnings from a traditional IRA without paying the 10% penalty? a.)
35-year-old Mario, who is unemployed and requires money to pay his health insurance premiums b.)
James, a 62-year-old tech engineer, who wants to buy a luxury car c.)
47-year-old Keren, who wants to transfer her retirement savings to her spouse's account d.)
Tom, a 45-year-old teacher, who applied for early retirement
Anthony and his son Nithin are co-owners of a brokerage account. The property title is such that the ownership of the brokerage account transfers automatically to the other in case of death.
Which type of property title do they have? a.)
Tenancy by the entirety b.) Fee simple
c.)
Joint tenancy with right of survivorship d.)
Tenancy in common
Which of the following statements is true of the residual clause in a will? a.)
It directs that the property not claimed by the beneficiary of a will be given to the state. b.)
It provides details about how the taxes due on a deceased individual's property are to be paid off. c.)
It explains how to distribute property that was disclaimed d.)
It states that all the property not claimed by the beneficiaries will automatically be given to the executioner of the will.
Which of the following is a feature of a general power of attorney (POA)? a.)
A general POA is used to make a medical decision to remove the life support system of the person drafting it. b.)
A general POA comes into action only if a pre-determined event occurs. c.)
A general POA terminates only when the person drafting it dies. d.)
A general POA terminates when a person drafting it becomes incapable of making decisions.
Mary is a single mother and requires guidance and advice in all financial aspects to achieve her future financial goals.
Which type of financial help provider is suitable for Mary? a.)
A financial planner b.)
A tax advisor c.)
A financial counselor d.)
A legal advisor
CHALLENGE 3
Which of the following is an indicator of a possible financial fraud? a.)
An investment opportunity that provides low returns at no risk b.)
An investment opportunity that assures high returns with low risks c.)
An investment opportunity that does not assure any returns unless an investor is ready to take high risks d.)
An investment opportunity that provides high returns with very high risks
Which of the following messages is most likely to be part of a phishing scheme? a.)
During our account verification process, we couldn’t validate your information. Click here to update your account information. b.)
Are your investments getting the best returns? We have the perfect solution for you. Contact your financial advisor today. c.)
Thank you for visiting our website! If you liked the content, click the link below to subscribe to our weekly newsletter.
d.)
Saving for college? Learn to make the best use of your hard-earned money at our free webinar
How does Securities Investor Protection Corporation (SIPC) insurance provide protection to investors of a brokerage firm? a.)
It ensures that only those with high credit scores are allowed to make an investment with the brokerage firm. b.)
It pays back the investors if a brokerage firm fails to pay its dues. c.)
It ensures that investments in a brokerage firm are diversified such that it obtains maximum returns. d.)
It assures the investor a fixed return from the investment scheme, even if the investments are not profitable.
What strategies should Anand use to avoid procrastination?
a.)
He should set aside some time to work on saving and investing and reward himself when the task is finished.
b.)
He should recognize that saving and investing is largely out of his control because time is a limited commodity.
c.)
He should place a higher priority on spending money today instead of planning for his future savings and investments.
d.)
He should perform household tasks which are easy and comfortable before tackling the harder decisions of saving and investing.
MILESTONE
How does a limited power of attorney (POA) differ from a durable power of attorney (POA)?
A limited POA comes into effect after the maker becomes incapacitated, whereas the durable POA terminates once the maker becomes incapacitated.
A limited POA authorizes an agent to make emergency medical decisions, whereas a durable POA does not authorize the agent to make medical decisions.
A limited POA remains valid until the maker's death, whereas a durable POA is valid only for a short specified time.
A limited POA terminates when the maker becomes incapacitated, whereas the durable POA remains effective even if the maker becomes incapacitated Living Wills and Power of Attorney
2
Tim used his problem solving skill to compare health insurance plans. He decided to pick a fee-for-service plan to meet his needs.
Which of the following is true regarding Tim's choice?
He must first receive a referral from a network provider to receive coverage if he opts for treatment outside the network.
His out-of-pocket expenses will be the same in network hospitals and nonnetwork hospitals.
He can only use doctors, specialists, clinics, and hospitals in the plan’s network, unless it is an emergency.
He can get medical treatment at any hospital without prior permission
Which of the following actions could result in an individual becoming a victim of a financial fraud?
Trusting a stranger and transferring money to them over the internet
Looking into the details of an investment scheme before investing
Refraining from paying any processing fees required to gain possession of a
Sending money to a relative who lives overseas using online services Fraud
Which of the following statements correctly describes probate?
Probate refers to the process that involves obtaining a deceased person's taxes from their legal heirs.
Health Insurance 3
money
prize
Financial
4
Probate refers to the disposal of disclaimed property as per the order of the executor of a will.
Probate refers to the process of hiring an attorney to draft a will for the deceased individual's property.
Probate refers to the execution of a will under court supervision. Wills
Rachel, 28, a software engineer, decides to opt for a traditional IRA instead of a Roth IRA for her retirement plan. Her plan includes 75% stock which is high-risk, high-reward.
Is this a productive choice of plans for Rachel? Why or why not?
It is productive because Rachel's withdrawals from the account after retirement will be tax exempt.
It is productive because Rachel can withdraw money from the account at any time without penalty.
It is not productive because as Rachel's earnings grow over time, she'll likely reach a higher marginal tax rate during retirement.
It is not productive because Rachel cannot claim tax deductions on her contributions toward her retirement account.
Individual Retirement Accounts
6
Sarah buys all her clothes from an online shopping site. The shipping cost is $30 for orders below $100, but the site offers free shipping for orders $100 and up. Sarah decides to buy an additional item for $45 to obtain free shipping on her order. Which strategy is the online site using to increase its sales?
Hyperbolic discounting
5
Status quo bias bias aversion Financial Well-Being
Which of the following statements is true of an umbrella policy?
It provides blanket insurance coverage for all liabilities.
It provides compensation to the family members if the homeowner dies.
It insures valuable assets such as art, collectibles, and jewelry by charging an additional fee.
It provides protection from identity theft at no extra premium. Homeowner's and Renter's Insurance
8
Which of the following expenses is covered by a split limit personal automobile policy (PAP)?
A portion of the monthly payments for leased automobiles
The cost to repair damage to the insured vehicle caused by a natural disaster
The cost to repair any damages caused to the insured vehicle
The cost to repair damage to someone else's property caused by the policyholder Auto Insurance
Confirmation
Loss
Your
7
9
Thirty-five-year-old Samuel earns $36,000 a year. He's healthy and financially stable. His employer does not offer a pension plan or a defined contribution plan, so he decides to wait to invest any money towards his retirement.
Is Samuel's decision productive? Why or why not?
It is productive because he can take advantage of his company's matching contributions while he waits.
It is not productive because given his good health and financial status, he should take advantage of investing early toward retirement.
It is not productive because he is very close to retirement age and needs to maximize his required savings rate.
It is productive because the latest trends show that pension plans are on the rise and his company might choose to offer one soon.
Planning for Retirement 10
Jose has invested in long-term care insurance for many years. He recently suffered a stroke and claimed his long-term care insurance. Which of the following benefits is he likely to receive?
His insurance will pay for a skilled nurse who provides him with around-the-clock care.
His insurance will provide him unlimited benefits as long as his place of residence stays the same.
His insurance will have an unlimited benefit period, keeping the policy active for as long as he is alive.
His insurance will provide home care assistance and cover all his associated medical costs.
In which of the following scenarios is the individual paying an insurance premium?
When Ravi needed surgery, he had to pay the full $2,000 surgery cost because his insurance would only begin paying after $5,000.
After paying up to $6,000 in medical bills for the year, Chrissy pays only 10% for each prescription.
Each month, Laura pays $150 for health insurance coverage through her employer.
When he had to get surgery, Ezra had to pay $4,000 out-of-pocket, after which his insurance began to cover the costs.
What Is Insurance?
Cole has zero savings as most of his earnings are used to pay for all his monthly expenses. He has permanent life insurance and pays a $350 premium every month.
Which of the following is a feature of permanent life insurance that could also benefit Cole's financial situation?
In Cole's policy, the cost of the premiums, although high in the beginning, decreases as the years progress.
In this policy, a portion of the premium is stored as cash reserves that can be withdrawn or borrowed by Cole.
Cole's health is also insured under this type of policy, and it reduces his expenses on his medical bills.
Long-Term Care Insurance 11
12
The interest generated by the insurance's cash reserve is paid to Cole every month.
Life Insurance
13
Which of the following features of a hedge fund might make it risky for investors?
The investor is required by contract to deal solely with the owner of the scheme.
A hedge fund is less regulated when compared to other investment bodies
The money in a hedge fund is mostly invested in bank products to obtain high returns.
In a hedge fund, the older investors are given a return on their investment using the money contributed by the new investors.
Protecting Your Investments 14
Marina wants to protect herself from financial loss as a result of identity theft.
What advice should you give her?
She should carry her Social Security number and credit card details wherever she goes.
She should use the same password for her credit card, debit card, and bank accounts.
She should reconcile her bank accounts monthly and report any problems to her bank or creditor immediately
She should never hesitate to respond to calls that ask her to confirm her personal details.
Identity Theft
Which of the following is true of long-term disability insurance?
It comes into effect after the insured has reached age 65.
It becomes effective after you cannot work for six to 12 months.
It will replace a portion of a person's salary for three to 12 months after an injury.
The cost of the premium decreases with the extension of the coverage period. Disability Insurance
16
In which of the following scenarios should the individual opt for a financial counselor rather than a financial planner to be most productive?
Karen is considering options to save for her children's education.
Dre is in financial difficulties and needs to clear his credit card dues as early as possible.
Aishwarya wants to ensure that she has enough saved for retirement.
Ashley wants to expand her cooking business to several different states. Financial Advisors
17
Which of the following statements is true of gifts?
It is mandatory for the donor to file a gift tax return if the amount paid to the recipient is more than $15,000
Donors are obligated to pay taxes only if they gift money to charities.
15
It is the recipient's obligation to file a tax return if the gift is monetary.
Gifts are an involuntary transfer of funds from the donor's assets after their death.
