Understanding Business and Personal Law

Chapter 35: Insurance Protection

Insurance Protection

1.
You can purchase an annuity by paying a lump-sum premium or by making periodic payments to an insurer.
A)TRUE
B)FALSE
2.
The insurer may cancel the policy if the insured
A)makes false statements.
B)marries or divorces.
C)moves to another state.
D)develops a catastrophic illness.
3.
The main difference between Medicare and Medicaid is
A)Medicare pays for adults over age 18 while Medicaid pays for children up to age 18.
B)Medicare pays for inpatient hospital care while Medicaid pays for 80 percent of doctors' and other medical services.
C)Medicare is federally funded while Medicaid is state and locally funded.
D)Medicare is provided for all people over age 65, while Medicaid is a healthcare plan for low income people.
4.
The beneficiary is also known as the policyholder.
A)TRUE
B)FALSE
5.
Under COBRA, employees may elect to reduce their health insurance premiums by 50 percent.
A)TRUE
B)FALSE
6.
Universal life insurance is
A)also called ordinary life insurance and requires the premiums to remain constant throughout the policy.
B)a form of insurance which provides protection for a stated time, usually 20 or 30 years.
C)a form of straight life insurance which allows you to change the terms of the policy as your needs change.
D)a form of limited-payment insurance which allows you to stop paying premiums after a stated period of time.
7.
The major purpose of insurance is to
A)minimize liability and reduce lawsuits.
B)spread the losses among a greater number of people.
C)pass risk to someone else.
D)provide a way for large corporations to make money.
8.
The premium is the amount of money you pay to the insurance company for insurance coverage.
A)TRUE
B)FALSE
9.
The face value is the amount of
A)money you want to spend to insure people or property.
B)money you can take by either borrowing against or cashing in the policy.
C)money you pay to the insurance company for the insurance coverage you want.
D)protection stated in a life insurance policy.
10.
Young families with large financial obligations are usually better off with whole life insurance than term insurance.
A)TRUE
B)FALSE
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