AFC Insurance & Risk Management Strategies 2

Question 1

A 35-year-old with two young children and a non-working spouse asks about life insurance. What type provides the most coverage per premium dollar?

Accepted Answer

Term life insurance

Answer

Whole life insurance

Answer

Universal life insurance

Answer

Variable life insurance

Question 2

What is the primary purpose of disability insurance in a comprehensive financial plan?

Accepted Answer

To replace a portion of income if the insured cannot work

Answer

To pay medical bills during illness

Answer

To cover long-term care facility costs

Answer

To provide a death benefit to dependents

Question 3

A client has a $200,000 home with a $150,000 mortgage and $300,000 dwelling coverage. What should the counselor identify?

Accepted Answer

The coverage may be appropriate if it reflects the replacement cost to rebuild

Answer

The policy is overinsured relative to market value

Answer

The deductible is likely too high

Answer

Coverage should be reduced to the mortgage balance

Question 4

Which health insurance plan type typically requires a referral from a primary care physician to see a specialist?

Accepted Answer

HMO

Answer

PPO

Answer

EPO

Answer

HDHP

Question 5

A client is choosing between a low-deductible plan ($500 deductible, $450/month) and a high-deductible plan ($3,000 deductible, $250/month) with HSA. What analysis should the counselor perform?

Accepted Answer

Calculate total annual cost under various utilization scenarios

Answer

Recommend low-deductible for more immediate coverage

Answer

Recommend high-deductible because premiums are lower

Answer

Choose based solely on monthly premium

Question 6

What is an umbrella insurance policy and when should a counselor recommend one?

Accepted Answer

An excess liability policy providing additional coverage beyond existing auto and homeowner's policies

Answer

A bundled home and auto policy

Answer

A weather-related damage policy

Answer

A short-term temporary risk policy