FiCEP Insurance Planning 2

Question 1

What is the purpose of an insurance deductible and how does it affect premiums?

Accepted Answer

A deductible is the amount the insured pays before coverage begins; higher deductibles lower premiums

Answer

The deductible is the out-of-pocket amount before insurance coverage kicks in. Higher deductibles lower premium costs.

Question 2

A client has employer life insurance equal to one year's salary. Is this sufficient?

Accepted Answer

Usually not; most experts recommend 10-12 times annual income

Answer

One year's salary typically falls far short of family needs. Most guidelines recommend 10-12 times annual income.

Question 3

What is an umbrella insurance policy and who should consider it?

Accepted Answer

Extra liability coverage extending beyond home and auto policy limits, recommended for those with significant assets

Answer

An umbrella policy provides additional liability coverage above existing home and auto limits, protecting personal assets.

Question 4

What is the difference between copay, coinsurance, and out-of-pocket maximum?

Accepted Answer

Copay is a fixed amount per visit; coinsurance is a percentage after deductible; out-of-pocket maximum caps total patient spending

Answer

A copay is a fixed fee per service, coinsurance is a patient percentage after deductible, and out-of-pocket maximum is the yearly ceiling on cost-sharing.

Question 5

Why is long-term care insurance important and when should clients consider it?

Accepted Answer

It covers nursing home and assisted living costs not covered by Medicare; consider it in your 50s

Answer

Long-term care insurance covers extended care not covered by Medicare. Purchasing in one's 50s provides more affordable premiums.

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP Insurance Planning 2