#1
Which of the following is a type of insurance that provides coverage for a specific period of time?
Term life insurance
ExplanationProvides coverage for a specified duration.
#2
What does the term 'premium' refer to in insurance?
The amount the insured pays for coverage
ExplanationThe cost of insurance coverage.
#3
What does the term 'deductible' mean in insurance?
The amount the insured pays out of pocket before the insurance coverage kicks in
ExplanationInitial out-of-pocket expense before coverage.
#4
Which of the following is NOT a common factor affecting insurance premiums?
Blood type
ExplanationBlood type is not typically a premium factor.
#5
What does the term 'co-payment' mean in health insurance?
The fixed amount the insured pays for a covered service or prescription
ExplanationFixed fee for covered services.
#6
Which of the following is a characteristic of term life insurance?
Has lower premiums compared to permanent life insurance
ExplanationTypically offers lower premium payments.
#7
What is the purpose of a beneficiary designation in an insurance policy?
To specify who receives the policy benefits
ExplanationDesignates recipients of policy benefits.
#8
What is 'underwriting' in the context of insurance?
The process of evaluating and determining the risk of insuring a person or property
ExplanationRisk assessment and policy approval process.
#9
What does the term 'cash value' refer to in permanent life insurance?
The savings component of the policy that accumulates over time
ExplanationAccumulated savings within the policy.
#10
What is the primary purpose of 'reinsurance' in the insurance industry?
To transfer risk from one insurance company to another
ExplanationRisk transfer mechanism between insurers.
#11
Which of the following types of insurance provides both a death benefit and an investment component?
Whole life insurance
ExplanationCombines death benefit with investment feature.
#12
What is the purpose of 'riders' in insurance policies?
To add additional coverage or benefits to a policy
ExplanationSupplementary coverage options.
#13
Which of the following is a characteristic of a 401(k) retirement plan?
Withdrawals before age 59 ½ may incur penalties
ExplanationPenalties for early withdrawals.
#14
What is the 'efficient market hypothesis'?
A theory suggesting that stock prices reflect all available information
ExplanationStock prices incorporate all info.
#15
What is 'catastrophic coverage' in health insurance?
Coverage for major medical expenses after reaching a high deductible
ExplanationProtection for severe medical costs.