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Answer Keys for Chapter 19 Quizzes Chapter 19 Reading Quiz Answer Key 1. Around the time in the Middle Ages when government bonds were created, there was more financial innovation. What else was invented? I. Pensions. Pensions are guaranteed monthly amounts of money when you retire, which began as a way to reward knights. II. Banks. Banks were safe institutions to deposit money first used by pilgrims and protected by knights. A. I only B. II only C. Both I and II D. Neither I nor II 2. What is insurance? A. When a customer agrees to pay a regular amount of money over a period of time to be compensated in case of specific emergencies. GENERALLY, you need insurance for things you could not afford if you had an emergency. For example, we have health insurance because if we ever need to go to the hospital and get surgery, we would never be able to afford the bill (which could be $50,000+). Instead we pay an insurance company each month or year and then they pay for any hospital stays or emergencies. B. When a customer will receive a regular amount of money over a period of time if he/she pays for the full cost of an emergency. C. When a customer receives principal and interest after giving the government a loan. D. When a person receives a monthly amount of money after retiring. 3. Which of the following is a common example of insurance? I. Renters insurance – pay a little bit of money every month to be compensated in case of fire or theft to an apartment II. Health insurance – pay a monthly amount of money to be compensated in case of a health emergency III. Longevity insurance – pay a monthly amount of money to be compensated in case you ever run out of money in times of old age A. I only B. I and II C. I, II, and III – these all exist! If you rent an apartment, you almost always need renter’s before a landlord will let you move in. Health insurance is no longer mandatory by law, but everyone should have it since having an emergency can easily bankrupt a person. Longevity insurance is much less common and not necessary for most people. If you’re wise with your money and investing for retirement, you should not need this. D. None of the above 4. In a normal insurance agreement, what refers to the monthly amount of money you pay to keep the insurance plan in place? A. Premium – this is the payment you make each month (or once a year) to keep an insurance policy active. If you miss a payment(s), you may lose your coverage. B. Deductible C. Copay D. Contract 5. In a normal insurance agreement, what refers to the extra money you need to pay (in addition to the monthly amount) to activate your insurance? For example, if you are in a car accident and the total repairs are $10,000 and you have to pay your $200 monthly payment and an additional $300 for the insurance company to pay for the rest of the $10,000 repairs, what is the $300 called? A. Premium B. Deductible – this is what you pay before the insurance company pays. For instance, if you have a $1,000 deductible for your health insurance and you get a hospital bill for $60,000, you pay the first $1,000 (the deductible) and the insurance company pays the rest ($59,000). C. Copay D. Contract Chapter 19 YouTube Quiz Answer Key 1. Insurance can be described as… I. The ability to never pay for a thing ever II. Protection III. An extra layer of defense A. I only B. II only C. I and II D. II and III – we all wish I were true, but sadly it is not. 2. When does someone buy insurance? A. When they have an exciting opportunity that will change the rest of their life B. Right before college C. When the cost of an emergency is much higher than how much they have in savings. GENERALLY, you need insurance for things you could not afford if you had an emergency. For example, we have health insurance because if we ever need to go to the hospital and get surgery, we would never be able to afford the bill (which could be $50,000+). Instead we pay an insurance company each month or year and then they pay for any hospital stays or emergencies. D. When you have never had a savings account before 3. Why should we always be suspicious about insurance products? A. There is a “seller” of insurance products and usually that person receives a high commission, which is a bonus an employee receives upon completion of sale. These insurance agents will always try to get you to spend as much money as possible on your insurance policy because the more you spend, the more they make. Know what you need and don’t fall for getting more than is necessary. B. There is a “seller” of insurance products and usually that person receives a low commission, which is a bonus an employee receives upon completion of sale. C. They come in physical packages and are protected by dragons. D. There is NO “seller,” therefore the government requires $0 cost to consumers. 4. Which statement is true about insurance salespeople? I. They always follow the fiduciary standard. II. They sometimes follow the fiduciary standard. III. They sometimes receive bonuses. A. I only B. I and II C. II and III – I is false. They do not have to follow the fiduciary standard, which means they do not need to act in your interests. Instead, they can get you to buy products that make them more money even if you do not need them. D. I, II, and III 5. What is life insurance? A. You pay premiums and your family receives money when you die. This is ideal for people who have children in case they pass away. If this happens, their family will receive a large check to help pay for expenses. B. You are given little payments over months and years of your life and must pay back the government. C. The type of insurance that pays 100% of your hospital bills so you don’t have to. D. The belief that living off your savings is good enough. 6. A premium can be described as… A. The amount you receive when you activate your policy B. The amount you pay to start and sometimes maintain an existing policy - this is the payment you make each month (or once a year) to keep an insurance policy active. If you miss a payment(s), you may lose your coverage. C. The amount you pay the government, every year, in small portions of all your year’s paychecks D. The name of your tax refund 7. Deductibles can be described as … A. The amount you must pay to activate your insurance – this is what you pay before the insurance company pays the rest. For instance, if you have a $1,000 deductible for your health insurance and you get a hospital bill for $60,000, you pay the first $1,000 (the deductible) and the insurance company pays the rest ($59,000). B. Surprise bills the insurance company designed on purpose so you won’t notice paying them C. The amount you receive when your insurance contract pays out D. What happens when insurance companies fail to pay out, which the government refuses to get involved with 8. Car insurance is… I. Required by law II. Gets more expensive with every traffic ticket a person gets III. Is always highest for those between age 18 and 25 A. I only B. I and II C. II and III D. I, II, and III – Safe drivers who have experience (older than 25 with no accidents or traffic tickets) pay less for their car insurance because the insurance company can trust them more. By law, everyone who owns a car must have car insurance. 9. Life insurance tends to be best for ... A. Children B. Married individuals C. Families D. B and C – children do not need life insurance because they don’t have bills that they pay. Parents and married people should have life insurance so that if something happens to them, their family can still pay the bills without their income. 10. Health insurance is important because… I. It tends to be very cheap for all people. II. If someone loses it, health insurance bills become causes of bankruptcy. A. I only B. II only – health insurance is generally not cheap, but if you don’t have it and you have an emergency, the bills can easily bankrupt most people. C. Both I and II D. Neither I nor II Chapter 19 Summative Quiz Answer Key 1) Asset Z pays a specific amount of interest. More specifically, a person provides principal to the government, bank, or company. Then, the government, bank, or company returns the principal plus interest. Asset Z is what? A. A credit card B. A debit card C. A bond – this is basically a reverse loan from you to the government. For example, you give them $50 now and in, let’s say 5 years, they’ll give you $75. D. A stock 2) Henry’s Peanut Butter Shoes (HPBS) is a new company taking America by storm. In an attempt to recruit and keep high-quality employees, HPBS decides to offer a retirement plan.
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