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Final check — Insurance Fundamentals: Life, Health, and Property & Casualty

Answer the 36 questions. You need 80% or more to pass. You can retry as many times as you like.

Question 1What is the core principle that makes insurance work?Risk pooling, where many pay premiums so the few who suffer losses can be paidGuaranteeing every policyholder gets back more than they paid inInvesting premiums so no claims ever need to be paidEliminating all risk from a person's life

Question 2A deductible is best described as:A monthly fee paid to keep the policy activeThe amount you pay out of pocket before insurance starts payingThe maximum the insurer will ever payA bonus the insurer pays at year end

Question 3In a health plan, what is coinsurance?A flat dollar amount paid at each visitA second insurance company sharing the policyThe percentage of a covered cost you pay after meeting the deductibleThe discount for paying premiums annually

Question 4A copay (copayment) is:A percentage of the total billThe annual premium divided by twelveMoney the insurer refunds youA fixed dollar amount you pay for a specific service, such as $30 for a doctor visit

Question 5Once you reach your out-of-pocket maximum on a health plan in a given year, what happens?The insurer pays 100% of covered, in-network costs for the rest of the yearYour premium stops for the rest of the yearYour coverage ends until you renewYou must start paying a new deductible immediately

Question 6Which item in a policy lists things that are specifically NOT covered?The declarations pageThe exclusionsThe ridersThe premium schedule

Question 7A rider (or endorsement) on an insurance policy is:A penalty for late paymentA government tax on the policyThe agent who sold the policyAn add-on that modifies coverage, adding or changing a benefit

Question 8What is the main difference between term life and whole (permanent) life insurance?Term covers a set period and has no cash value; whole lasts for life and builds cash valueTerm is only for seniors; whole is only for young peopleTerm pays no death benefit; whole pays doubleThere is no difference; the names are interchangeable

Question 9For most young families seeking the most death-benefit coverage per dollar, the common starting recommendation is:Whole life because premiums never changeTerm life because it costs much less for the same death benefitNo life insurance until retirementOnly credit card accidental death coverage

Question 10In a life insurance policy, the beneficiary is:The insurance company's investment fundThe agent who earns commissionThe person or entity who receives the death benefitThe doctor who certifies the cause of death

Question 11A common rule-of-thumb for estimating life insurance need is roughly:One month of salaryThe price of one carExactly one year of rentAbout 10 to 12 times your annual income, adjusted for debts and goals

Question 12How does an HMO typically differ from a PPO?An HMO usually requires a primary care referral and in-network care; a PPO offers more flexibility, often at higher costAn HMO has no premiums; a PPO has no deductibleA PPO only covers dental; an HMO only covers visionThey are identical in every way

Question 13A key advantage of a Health Savings Account (HSA) is that:It can only be used by people over 65Contributions are tax-advantaged and unused funds roll over year to yearIt pays your premiums automaticallyIt requires no health plan at all

Question 14Which account is generally tied to a high-deductible health plan and owned by the individual?FSA (Flexible Spending Account)HRA (Health Reimbursement Arrangement)HSA (Health Savings Account)A 401(k) retirement account

Question 15A common 'use it or lose it' feature applies most to which account?An HSAA Roth IRAA taxable brokerage accountAn FSA, where unused funds may be forfeited at year end

Question 16Going 'out of network' on most health plans usually means:You pay more, and some plans may not cover it at allYour care is always freeYour premium is automatically loweredThe insurer pays double the cost

Question 17In auto insurance, liability coverage primarily pays for:Repairs to your own car after a single-car crashInjuries and property damage you cause to othersA new car every five yearsYour gasoline and maintenance

Question 18Which auto coverage pays to repair YOUR car after you hit another vehicle or object?Liability coverageComprehensive coverageCollision coverageRoadside assistance

Question 19Comprehensive auto coverage typically pays for damage from:A collision with another moving car onlySpeeding ticketsYour own deductibleNon-collision events such as theft, fire, hail, vandalism, or hitting an animal

Question 20State minimum auto liability limits are best understood as:The legal floor, which is often too low to cover a serious accidentThe ideal amount everyone should buyA cap on what insurers can chargeCoverage that includes your own medical bills automatically

Question 21Which of the following typically RAISES your auto insurance premium?A long history with no claimsAt-fault accidents and traffic violationsChoosing a higher deductibleCompleting an approved defensive-driving course

Question 22On a homeowners policy, 'dwelling' coverage primarily protects:Your furniture and clothingVisitors injured on your propertyThe physical structure of your houseYour car parked in the garage

Question 23In home and renters policies, 'contents' (personal property) coverage applies to:The building's foundationYour neighbor's belongingsThe land the home sits onYour personal belongings such as electronics, furniture, and clothing

Question 24A renter who skips renters insurance because 'the landlord has insurance' is mistaken because:The landlord's policy covers the building, not the tenant's belongings or liabilityLandlords are legally required to insure tenant propertyRenters insurance is illegal in most statesRenters insurance only covers the building structure

Question 25Standard homeowners policies generally do NOT cover damage from:A kitchen fireWind damage to the roofFlooding from rising water and most earthquakesA burglary of household items

Question 26The liability portion of a home or renters policy mainly covers:Repairs to your own roofCosts if someone is injured on your property or you damage others' propertyYour monthly rent paymentRoutine appliance maintenance

Question 27Disability insurance is designed to:Pay off your mortgage in full at onceCover your funeral expensesReplace a portion of your income if illness or injury keeps you from workingPay for car repairs

Question 28What does an umbrella (excess liability) policy do?It replaces your auto and home policies entirelyIt only covers weather-related eventsIt pays your health deductiblesIt adds extra liability protection above the limits of your auto and home policies

Question 29All else equal, choosing a HIGHER deductible on a policy usually:Lowers your premium but raises your out-of-pocket cost when you file a claimRaises both your premium and your claim payoutHas no effect on premium at allEliminates the need to ever file a claim

Question 30When comparing two health plans, why is looking only at the monthly premium a mistake?Premiums are illegal to compareA low premium often comes with a high deductible and out-of-pocket max, so total cost can be higherThe premium always equals the total annual costPremiums never change between plans

Question 31A driver carries only state-minimum liability and causes a crash with $150,000 in damages, far above the limit. What typically happens?The insurer must pay the full $150,000 regardless of limitsThe damages are automatically forgivenThe insurer pays up to the policy limit; the driver can be personally responsible for the restThe state pays the difference

Question 32In the claims process, what is an adjuster's main role?To sell you a new policyTo collect your monthly premiumsTo set state minimum coverage lawsTo investigate the claim and estimate the covered loss the insurer will pay

Question 33If you disagree with a denied or underpaid claim, a reasonable first step is to:File a written appeal with documentation and request a clear explanation in writingImmediately cancel the policyStop paying premiums in protestDo nothing, since denials are always final

Question 34Letting a policy 'lapse' (stop paying so coverage ends) is risky mainly because:It always doubles your next premiumYou are uninsured for any loss during the gap, and re-buying may cost more or be harderIt is a criminal offense in all casesThe insurer must refund all past premiums

Question 35A person insures a home for far less than its rebuild cost to save on premiums. This 'under-insuring' is risky because:Premiums will rise automatically to match the real valueThe insurer is legally barred from paying any claimIt guarantees a faster claim payoutAfter a major loss, the payout may fall far short of what it costs to rebuild or replace

Question 36Which scenario best illustrates 'over-insuring' (paying for coverage with little real value)?Buying a costly extended warranty and collision coverage on a 20-year-old car worth only a few hundred dollarsCarrying adequate liability limits for your assetsBuying term life to protect young childrenInsuring a newly built home for its full rebuild cost

Final check — Insurance Fundamentals: Life, Health, and Property & Casualty

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