Personal Financial Literacy

What is the primary purpose of health insurance?

• To cover routine medical expenses

• To protect against major medical expenses

• To provide guaranteed income after retirement

• To eliminate out-of-pocket healthcare costs

Which component of health insurance is a fixed amount you pay for each doctor visit or prescription?

• Premium

• Deductible

• Co-pay

• Coverage limit

What is the main difference between collision and comprehensive auto insurance?

• Collision covers repairs for theft; comprehensive does not.

• Collision covers damages from accidents; comprehensive covers non-collision damages.

• Collision insurance is required by law; comprehensive insurance is not.

• Comprehensive covers damages to others’ property; collision does not.

Why is liability insurance often considered the most important part of an auto insurance policy?

• It pays for your car’s repairs after an accident.

• It covers legal expenses if you are sued.

• It protects against claims for damages caused to others.

• It pays for damages to your car from natural disasters.

What is the main advantage of renter’s insurance over homeowners insurance?

• It is less expensive and only covers personal belongings.

• It covers the structure of the home and personal property.

• It includes liability coverage for accidents in the home.

• It covers property damages caused by earthquakes.

How does a deductible affect the cost of an insurance policy?

• A higher deductible lowers monthly premiums.

• A higher deductible increases the amount covered.

• A lower deductible decreases the need for coverage.

• A lower deductible increases the chance of claims being denied.

What is the purpose of comprehensive auto insurance?

• To cover repairs for damages from accidents.

• To pay for medical expenses after an accident.

• To cover theft, fire, vandalism, or natural disasters.

• To replace your car after a total loss.

What is the primary purpose of a credit score?

• To calculate the total amount of debt a person owes

• To determine a borrower’s likelihood of repaying debt

• To decide how much income a borrower can keep after taxes

• To establish the minimum interest rate for a loan

Which of the following would most negatively affect your credit score?

• Making a late payment on a credit card

• Opening multiple new accounts in a short time

• Paying off a loan early

• Having a high income but no credit history

What does APR represent?

• The total amount borrowed over the life of a loan

• The annual cost of borrowing expressed as a percentage

• The maximum interest rate allowed by law

• The amount of unpaid principal at the end of each month