Exam 3 HW Questions

An automobile warranty provides coverage for the basic parts against​ manufacturer's defects for a set period of time or miles.

True

Stretching a car loan from 48 months to 60 months means the car will end up costing you more when you have paid in full.

True

PITI stands for the total of your monthly

principal, interest,​ taxes, and insurance.

You have just obtained a mortgage to purchase your home. The​ ________ that you paid to obtain the loan are charges that must be paid at the time of the sale and serve to raise the effective cost of the loan.

points

The majority of people never live in rental housing.

False

A subprime mortgage is a mortgage with an APR below the prime rate.

False

A mortgage with an APR higher than normal is a subprime mortgage.

True

Jeremy does not like the idea of paying points. A point is actually

one percent of the amount financed with the mortgage.

The two primary advantages of a 15 year mortgage over a 30 year mortgage are

lower interest rate and lesser interest charges over the life of the loan.

The two most common types of step mortgages are the

5/25 and​ 7/23.

Wayne and Sarah are trying to manage the risk they face in life a best as they can. They are following Principle 7 which states

protect yourself against major catastrophes.

Life insurance may not be necessary if

​you're single and​ don't have any dependents.

​you're retired.

​you're married, a−income couple, with no children.

​you're married but​ aren't employed.

Andrew and Alice have health issues that may be passed on to their children. When the children are born would they be wise to obtain life insurance immediately on the infants prior to any of the medical conditions​ arising?

Yes, this would be wise as the infant is not likely to have to pass a physical exam.

Using the earnings multiple approach is determining the present value of an annuity as a means to determine the face value of the insurance policy one needs to purchase.

True

With the needs​ approach, you should take into consideration any additional insurance policies that have been taken out on your life.

True

The earnings multiple approach is based on the notion that you want to replace a stream of annual income​ that's lost due to the death of a breadwinner.

True

A disadvantage of term insurance is that the cost rises each time the policy is renewed.

True

With decreasing term life​ insurance, the face amount of the policy remains​ constant, but the premiums decrease.

False

A guaranteed insurability rider allows you to increase your face value even if your health fails.

True

Most long term care policies require that you be unable to perform at least two​ ADL's. What are​ ADL's?

Activities of daily living

A

30 year old has what percent chance of a 90 day disability before the age of​ 65?

47

Medicare was enacted to help persons with disabilities and people people over the age of​ ________ who qualify for Social Security.

65

Antoine LaDuke suffered a major loss on his older home due to mud from a flood. Although he had​ homeowner's insurance, what was the probable reason he was not​ covered?

His policy excluded flood related damages

​Angela's home became overrun with termites. She had to stay in an apartment temporarily while her home was being fixed. The provision on her home owners policy that covers her expenses while she is not able to live in her home is known​ as: Coverage​ D: Loss of Use.

True

While you were walking your​ dog, she bit a child. Medical treatment for the child would fall under Coverage​ C: Personal Property.

False

Brandi thought it quite funny to have a decorative outhouse put on her property as a conversation piece. This structure is covered under Coverage​ A: Dwelling on her home owners policy.

False

Flood protection insurance is generally administered and subsidized by the federal government through the Department of Housing and Urban Development.

True

Fire, theft, and windstorm damage are examples of

perils

Your boyfriend is living in an apartment complex that has had a recent rash of robberies. He has​ $5,000 worth of rare coins. What should he do to protect himself in case of a​ robbery?

Add a personal articles floater to his policy.

Take a written and video tape inventory of his property.

Take out personal property replacement cost coverage.

If you wanted to obtain an endorsement that automatically updates the level of property coverage based on an index of replacement costs that continually updates the cost of building a​ home, you would ask for​ a(n)

Inflation gaurd

Coverage​ A: Dwelling protects

any attachments to your home.


your home.

The first​ homeowner's policy in the United States was written in 1735 in what​ city?

Charleston, S.C.

The minimum level of personal liability coverage per accident in a​ homeowner's policy​ is?

100,000

What is the number one natural disaster in the united​ States?

Floods

Lisa and Eric want to keep the cost down on the​ homeowner's insurance they will need. After talking to their parents they developed a list of ways to do so. Identify the one mistake on it.

Pay your insurance premiums quarterly.

It is possible to have a different deductible for collision loss than you have for comprehensive physical damages.

True

In​ 2014, at least 26 percent of all auto collisions involved cell phones.

True

Comprehensive physical damage coverage would cover damage if your car were hit in a parking lot.

True

Driving at 55 miles per hour for five seconds the minimum amount of time that texting takes your attention off of the road you'll travel the length of a football field without looking

True

Young​ ________ generally pay the most for their​ insurance, because they have a statistically greater chance of having an accident.

unmarried males

Rosanne was in a car crash a few years ago that left her with hearing loss. She has decided to sue the owner of the other automobile for the medical costs of recovering her hearing. How many​ years, from the date of the​ crash, does she have to file a claim for the​ expenses?

3 years

According to the Keown​ textbook, after a DUI​ conviction, how long will you increased rates​ continue?

3-5 years

An option gives its owner the right to buy or sell an asset. This asset is generally

Common stock

According to the Love​ & Money​ section, on​ average, how long does it take Americans to recover financially from a​ divorce?

5-10 years

A will created by an attorney cannot be contested

False

An attachment to a will that alters or amends a portion of the will is called a

Codicil

John Kennedy Jr. and his wife Caroline both perished in the same plane crash. Which of the following clauses would identify who is assumed to have perished​ first?

Common Disaster clause

For most married​ couples, tenancy by the entirety is the best way to establish ownership

True

If you die without​ one, your state will​ "write one for​ you" based on intestacy laws

True

Only about​ ________ Americans have created a trust as part of an estate plan.

one out of 5

________ is a type of ownership that exists only between married couples

Tenancy by the entirety

When you get​ married, by law you must have joint credit card accounts instead of individual accounts.

False

Your​ spouse's credit score may have a positive or negative impact on your ability to acquire a mortgage together.

True

Part of the getting started stage is to begin saving for your goals. What are the critical steps to doing​ so?

Catch your matches

Make savings automatic

Live within your means

Which of the following does a budget help you​ accomplish?

It forces you to use restraint

Which of the following is one of the​ "keys to financial​ success" as outlined in Chapter 17 of your​ textbook?

Realize you aren’t indestructible

Hide your plastic

Live below your means

Suppose that you want to purchase a home. Your lender has told you that the standard limit for your total debt limit ratio is​ ________ including your mortgage debt.

36%