FFC Insurance and Protection Planning 2

Question 1

An umbrella liability insurance policy is best described as:

Accepted Answer

Excess liability coverage above underlying auto and homeowners limits

Answer

An umbrella policy provides extra liability coverage above the limits of underlying auto, homeowners, or other policies, protecting against large judgments.

Question 2

Which of the following is a key tax advantage of a Health Savings Account (HSA)?

Accepted Answer

Contributions, growth, and qualified medical withdrawals are all tax-advantaged

Answer

HSAs offer a triple tax advantage: contributions are pre-tax, growth is tax-deferred, and withdrawals for qualified medical expenses are tax-free.

Question 3

What does COBRA allow a recently terminated employee to do?

Accepted Answer

Continue their employer-sponsored health coverage for a limited period at their own expense

Answer

COBRA (Consolidated Omnibus Budget Reconciliation Act) lets qualifying individuals continue group health coverage after losing employer-sponsored insurance, typically for up to 18 months.

Question 4

What is the primary difference between whole life and universal life insurance?

Accepted Answer

Universal life offers flexible premiums and adjustable death benefits; whole life has fixed premiums and benefits

Answer

Universal life insurance allows policyholders to adjust premium payments and death benefits within limits, whereas whole life has fixed, guaranteed premiums and benefits.

Question 5

An annuity contract is primarily used to address which financial planning need?

Accepted Answer

Accumulating and distributing retirement income over a lifetime

Answer

Annuities are insurance contracts designed to accumulate funds and convert them into a stream of income, often for retirement purposes.

(FFC) Financial Fitness Coach Certification Practice Test

(FFC) Financial Fitness Coach Certification Practice Test

FFC Insurance and Protection Planning 2