Insurance WISE

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.

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."

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.

You have a $2,000 loss. Your insurance company pays you $1,500 on the claim for the loss. The $500 the insurance did not pay is a result of your policy having a:

• Co-insurance clause
• Deductible
• Hazard clause
• Premium

Why is term life insurance usually the least expensive type of life insurance?

• The policy only pays a death benefit
• The policy builds a cash value
• The policy provides coverage for a lifetime
• The policy is available to all consumers

Lucy has no insurance. The situation(s) should she consider insuring against first are:

• Death so her financial obligations are paid
• Losses resulting from an illness, accident, or disability
• Property losses and auto accidents
• Auto collision, and burglary

Which of the following insurance covers vehicles?

• Mortgage
• Racing
• Automobile
• Life

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

Sally took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the:

• Cash value
• Premium value
• Death benefit or face value
• Annuity value

The purpose of Insurance is NOT to:

• Diversify an investment portfolio
• Share risk with other policy holders and the insurance company
• Protect assets
• Protect against potential losses