W!SE Practice: Insurance

A person buys a flat screen, plasma, theater-like television. The person has homeowner's insurance. Why would it be appropriate to add a personal property floater to that insurance?

• To reduce the premium on the homeowner's insurance.
• To protect the person who owns the television from liability for damages.
• To show the insurance company a good faith investment has been made.
• To cover the cost of replacement should the television get damaged or stolen.

For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy.  At the time of surrender, the person will receive

• one-fifth of the $20,000 face value.
• $20,000 less the premiums paid.
• a calculated amount of money which includes the premiums paid as well as the interest on that money.
• a calculated amount of money that must be converted to a term life insurance policy.

A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent?

• "I think I need a personal property floater."
• "I think I should get speculative risk insurance."
• "I will deduct the cost of the jewelry from my premium."
• "I realize that if this jewelry is stolen it will be considered vicarious liability."

Which of the following insurance covers vehicles?

• Mortgage
• Racing
• Automobile
• Life

John's job provided the main income for his family.  He died unexpectedly and had no life insurance.  The probable financial consequence for his wife and two children does not include:

• The loss of John's income
• A reduction in the family's standard of living
• Death-related expenses to be paid
• An increase in income and expenses

Which statement does NOT accurately describe a characteristic of cash value for whole life insurance?

• Cash value grows gradually over time
• If the policy is cancelled, you may be entitled to some or all of the accrued cash value
• Policy that accumulates cash value is less expensive than a policy that does not accumulate cash value
• When an insured person dies, the beneficiary will receive the death benefit but the insurance company keeps the cash value

Richard's auto insurance policy expired on 5/15/2002.  Richard was upset with his insurance agent and decided to change insurance companies.  At 10:00 a.m. on 5/16/2002, as he drove to a different agent to buy a new policy, he had an accident.  Who is liable for damage to his car and his personal injuries?

• The old agent
• The new agent
• Richard
• The old agent is liable for damage to your car and the new agent for personal injuries

Neil will be traveling by air in Southeast Asia for a six-week vacation. Which step will not provide protection during the trip?

• Buy baggage claim insurance
• Take his passport
• Buy flight insurance
• Buy medical insurance that covers him when he travels internationally

The only type of life insurance that does not develop a cash value is:

• Term life insurance
• Whole life insurance
• Universal life insurance
• Variable universal life insurance

Insurance is frequently described as a method of "sharing the risk" because the:

• Risk of loss is shared with the insurance company sales person
• Insured shares the risk of loss with all the other policy holders
• Insured can share the risk by spreading the cost over a number of years
• Risk of loss is shared with the government