Topic Test Answers

Susan is paying $0.30 per $100 on her $483,000 home in homeowners insurance annually. If her annual homeowners insurance premium is divided into twelve equal monthly installments to be included on each of her monthly mortgage payments of $2128.00, what is her total monthly payment?

Leroux Health Insurance is considering changing the options in one of their health care plans (Plan A) based on customer feedback that prescriptions and regular visits to the doctor are too expensive for the insured individual. How can Leroux reduce the costs of regular health care without driving up the price of their health care plan?Leroux Health InsurancePlan A Cost: Monthly Premium: $248.00 Annual Deductible: $5,500.00 Co-pays: Brand-name Prescriptions $35.00 Generic Prescriptions $15.00 Visits: Primary Care Physician: $40.00 Specialist: $60.00 Urgent Care: $125.00 Emergency Room: $325.00

Which of the following statements is not something you should be thinking when considering changes in your auto insurance policy?

The manufacturing cost of an air-condioning unit is $544, and the full-replacement extended warranty costs $113. If the manufacturer sells 506,970 units with extended warranties and must replace 20% of them as a result, how much will the replacement costs be? (Note: Assume manufacturing costs and replacement costs are the same.)

A toaster oven costing $130 offers an extended warranty for 25% of the purchase price. If the local repair shop will fix a toaster oven for $8, how many times must the toaster oven break in order for the warranty to pay for itself?

In order to lower his monthly auto insurance bill, Henry has decided to change his existing policy by increasing the deductible for both collision and comprehensive insurance to the highest amount permitted by his insurance company, AA Auto Insurance. His current monthly auto insurance bill, which includes a $250.00 deductible for collision and a $50.00 deductible for comprehensive, is $43.79. How will Henry's monthly auto insurance bill be affected by the change? AA Auto Insurance Type of Insurance Coverage Coverage Limits Annual Premiums Bodily Injury $25/$50,000 $22.50 $50/$100,000 $31.75 $100/$300,000 $40.25 Property Damage $25,000 $120.50 $50,000 $144.75 $100,000 $193.00 Collision $100 deductible $520.00 $250 deductible $415.25 $500 deductible $275.75 Comprehensive $50 deductible $110.25 $100 deductible $100.00

Bob’s employer covers 23% of his family’s annual health insurance premium. The balance of the premium is deducted in equal amounts from Bob’s paycheck 26 times over the calendar year. If $185.30 is withheld from each of Bob’s paychecks, what is his family’s annual health insurance premium?

Because Bernard has some health issues, he must pay 15% more for life insurance. About how much more annually will a $115,000 10-year term insurance at age 35 cost Bernard than someone of the same age without health issues?

DeShawn is 38 years old and is married with 3 children, ages 2, 4, and 6. He makes $45,000 a year and is planning to retire when he turns 60. From the following three options, DeShawn decides to buy the $900,000 20 year term policy. Given DeShawn’s scenario, assess whether DeShawn made a wise decision.

Sammy is a full-time students who does not work. He is too old to stay on his parents health insurance and is looking for his own health care program. The two options he is considering are outlined in the tables below. OPTION 1: Fee-for-service OPTION 2: HMO $225 monthly premium $630 monthly premium$7,500 deductible No annual deductible Co-pays: Co-pays:Name-brand Drugs: $30 Name-brand Drugs:$25 Generic Drugs:$12 Generic Drugs$10 Visits: Visits: Primary Care Physician$30 Primary Care Physician$20 Specialist: $75 Specialist: $62 Urgent Care:$100 Urgent Care:$50 Emergency Room:$250 Emergency Room:$175 The first option is a fee-for-service plan with a $7,500 deductible. Sammy must pay the deductible amount in health-related costs (not including co-pays) before the insurance company will contribute. This plan costs $225.00 per month and requires co-pays for most standard healthcare costs.The second option is an HMO. It is significantly more expensive at $630 per month, but has no annual deductible. The standard co-pays are also less than those in the other option.Sammy is a young man in very good condition. He visits his primary care physician every other month to get physicals for school sports. He fills a prescription for his name-brand asthma inhaler every month. Sammy is an avid sportsman who loves skiing and snowboarding, two potentially dangerous activities.Considering the real possibility of a serious skiing or snowboarding accident that could put Sammy in the hospital for an extended period of time, which of the following statements is true for his situation? (Assume an extended hospital stay costs at least $12,000.)

Say you have a warranty on your laptop computer. Which of these situations is most likely to be covered by that warranty?

What kind of warranty is often offered not through the manufacturer but instead through a third party?

Which of the following is not considered one of the four basic types of auto insurance?

An electric guitar costs $830, with a $225 full-replacement warranty. If the manufacturer sells 532,475 warranties and has to honor 12% of them, how much profit did the manufacturer gain from the warranties?

A new DVD player has a purchase price of $430. With the extended warranty, the total cost is $512. What percent of the purchase price is the price of the warranty?

If Jesse wants to buy a $75,000 10-year term life insurance policy, and the annual premium rate (per $1000 of face value) for his age group is $2.34, how much is Jesse’s annual premium?

While driving recklessly, Thomas lost control of his car and accidentally drove it into the water fountain in his neighbor’s front yard. Thomas is fully insured through his insurance company. Which of the following components of his insurance policy will cover the damage he caused to his neighbors fountain?

Peter and Marcia, both age 34, can each pay $650 a year each on life insurance for themselves. About how much is the face value of the largest combination of policies they can buy?

Which of the following is a cost homeowners insurance does not protect?

Peter and Marcia, both age 34, can each pay $650 a year each on life insurance for themselves. About how much is the face value of the largest combination of policies they can buy?