Topic Test Answers

In an effort to reduce cost on auto insurance, Sophia has lowered each component of her current plan to the cheapest possible option. Sophia’s current insurance agency is Fret-No-More Auto Insurance, whose policy options are listed below. The annual premium for Sophia’s current policy is $511.31. What decrease in her annual premium will Sophia see after the change?Fret-No-More Auto Insurance Type of Insurance CoverageCoverage LimitsAnnual PremiumsBodily Injury $25/50,000$21.35 $50/100,000$32.78 $100/300,000$42.10 Property Damage$25,000 $115.50 $50,000 $142.44 $100,000 $193.78 Collision$100 deductible$490.25 $250 deductible$343.33 $500 deductible$248.08 Comprehensive$50 deductible$105.79 $100 deductible$88.23

Maria, age 28, wants to pay no more than $300 a year in life insurance. What is the face value of the largest 20-year term policy she can buy without spending more than $300 annually?

In order to make premiums more affordable for their customers, Leroux Health Insurance is considering some changes to one of the plans they offer. Both the current options and proposed changes are outlined in the charts below. Leroux Health InsurancePlan AProposed Changes Cost: Monthly Premium: $248.00 $203.00 Annual Deductible: $ 5,500.00 $8,500.00 Co-pays: Brand-name Prescriptions $35.00 $30.00 Generic Prescriptions $15.00 $10.00 Visits: Primary Care Physician: $40.00 $30.00 Specialist: $60.00 $45.00 Urgent Care: $125.00 $90.00 Emergency Room: $325.00 $250.00 If Kevin is currently insured under Leroux for his medical insurance under Plan A, how will the proposed changes affect his health care costs?

A lawnmower costs $284, and the six-year extended warranty on the lawnmower costs 17% as much as the lawnmower itself. What is the effective price per year of the extended warranty?

Of the following, which factor or factors would make it more likely that buying an extended warranty is a good idea?I. The extended warranty overlaps with the manufacturer’s warranty.II. The product has a high probability of needing repair in the next few years.III. The product is a major purchase that you are unlikely to soon replace.

Cindy's apartment complex is offering renters insurance through their insurance company. The insurance company charges an annual premium of $565.00 which can be paid in equal payments throughout the year with her monthly rent. Cindy's monthly rent is currently $789.00. What will Cindy's new rent be if she includes the renters insurance?

Tom is considering making changes to his policy to make insurance more affordable. Which of the following statements is not something Tom should consider when making changes to his policy?

The health care Jimmy’s employer offers is a fee-for-service plan in which Jimmy and his family must pay for $12,500 in health related services in a calendar year before the insurance company begins to pay. Jimmy and his family have several health related issues that demand $685.00 each month. If one of Jimmy’s children were to become seriously injured at the end of the year, how much more would Jimmy and his family need to pay before the insurance company begins to assume responsibility?

Angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. The Annual Life Insurance Premium (per $1000 of face value) for a 40-year-old male is 22.60 and for a 45-year-old male is 27.75. What would be the difference in total premium costs over 20 years for this policy at the two age levels?

Javier’s employer pays for 43% of his annual health insurance premium. Javier pays the remaining balance by having it deducted from his paychecks in equal amounts twice a month throughout the year. If $157.38 is deducted from each of Javier’s paychecks, what is his total annual premium?

The annual insurance premium for a car Nicole bought 6 months ago is $756.00 with a $500 deductible for collision. Nicole had just paid the bill for her sixth month of insurance before she was involved in a car accident resulting in $2,000 in damage to her car. Because she had collision insurance in her policy, the insurance company took care of all of the repairs less the $500.00 deductible. Considering how much she paid in insurance premiums and deductibles, would you say the purchase of insurance over the last 6 months was a good investment for Nicole? Why or why not?

A complete desktop computer costs $965. A replacement monitor costs $238, a replacement hard drive costs $260, a replacement outer case costs $145, labor to repair it costs $77, and shipping it to and from a repair center costs $41. A full warranty, which covers the entire cost of repairing the computer, is 35% of the purchase price. A limited warranty, which only covers internal parts and labor, costs 11% of the purchase price. If the computer tower is damaged, requiring a new hard drive, new case, labor, and shipping, which warranty will be the better deal, and by how much?

A vacuum cleaner costs $68, and the full-replacement extended warranty costs $22. If the manufacturer sells 360,920 vacuum cleaners under warranty and must replace 15% of them to honor the warranties, how much will the replacement costs be?

After getting married, Joe, 32, and Melinda, 29, decide to take out life insurance policies. Joe would like a 15-year term policy and Melinda would like a 20-year term policy. They each want a $300,000 policy. How much can Joe and Melinda expect to pay in premiums the first year?

In addition to general medical services, Holly would like to add dental and vision options to her health care plan. The monthly premium for her medical insurance is $345 of which her employer pays 65%. Her employer also offers to pay 50% of the monthly dental premium of $38 and 75% of the $23 monthly premium for the vision plan that is offered. If Holly opts for both the dental and vision options in addition to her regular health insurance, how much will Holly be responsible for paying each month? Soopergood Insurance Option Monthly Premium Employer Contribution Health Insurance $345 65% Dental $38 50% Vision $23 75%

Ned’s truck was caught in a hailstorm that left his truck body damaged and his paint job ruined. Ned is fully insured through his insurance company. Which of the following components of Ned’s insurance policy will take care of the damage done to Ned’s truck during the hailstorm?

Stephanie has a homeowners insurance policy for her $355,000 home with an annual premium of $0.42 per $100 of value and a deductible of $500. Under this policy, in the event of a major mishap, Stephanie would have a total annual out-of-pocket expense of . Stephanie would like to lower her premium by increasing her deductible. If Stephanie wants to increase her deductible to $1000, what annual premium would result in an annual out-of-pocket expense that is about the same as her current plan?

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