Question 1

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Tim used his problem solving skill to compare health insurance plans. He decided to pick a fee-for-service plan to meet his needs.

Which of the following is true regarding Tim's choice?

• He can only use doctors, specialists, clinics, and hospitals in the plan's network, unless it is an emergency.
• His out-of-pocket expenses will be the same in network hospitals and non-network hospitals.
• He can get medical treatment at any hospital without prior permission.
• He must first receive a referral from a network provider to receive coverage if he opts for treatment outside the network.

Question 2

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In which of the following scenarios should the individual opt for a financial planner rather than a financial counselor to be most productive?

• Mia wants to clear her accumulating credit card debt.
• Harper wants to find his way out of bankruptcy and minimize damage to his credit report.
• Colin wants to adjust his expenses to avoid another late mortgage payment.
• Lucas wants to open multiple car dealerships across the state.

Question 3

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Which of the following statements is true of a testamentary trust?

• The grantor of the trust is also the trustee.
• It is revocable.
• It is established while the grantor is still alive.
• It is established through a grantor's will.

Question 4

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Sarah buys all her clothes from an online shopping site. The shipping cost is $30 for orders below $100, but the site offers free shipping for orders $100 and up. Sarah decides to buy an additional item for $45 to obtain free shipping on her order.

Which strategy is the online site using to increase its sales?

• Hyperbolic discounting
• Status quo bias
• Confirmation bias
• Loss aversion

Question 5

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An investment scheme promises to increase the amount invested by 10 times over a period of five years.

What should an investor do before investing in such a scheme?

• The investor should check with and only trust the owner of the scheme.
• The investor should solely depend on the reviews provided by the previous investors of the scheme.
• The investor should look into the terms and conditions of the investment scheme.
• The investor should decide based on the investment's exposure to market risk.

Question 6

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Suppose an investment scheme offers you a high return at a low risk.

What does an offerlike this indicate?

• It indicates that investors have faith in the success of the investment scheme.
• It indicates that the money in the scheme is managed by financial experts.
• It indicates that the risk will increase if new investors invest in the scheme.
• It indicates that the scheme might be deceptive orfraudulent.

Question 7

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In which of the following scenarios is the individual paying an insurance copayment?

• Dina pays $30 for every doctor's appointment and her insurance company pays the rest.
• Eddie pays $400 a month for his insurance coverage.
• Claudia's employer pays $4,000 of her insurance costs and she pays $1,000.
• Ralph has to pay $6,000 before his insurance will begin to cover the costs of damage to his property.

Question 8

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Rachel, 28, a software engineer, decides to opt for a traditional IRA instead of a Roth IRA for her retirement plan. Her plan includes 75% stock which is high-risk, high-reward.

Is this a productive choice of plans for Rachel? Why or why not?

• It is not productive because Rachel cannot claim tax deductions on her contributions toward her retirement account.
• It is productive because Rachel's withdrawals from the account after retirement will be tax exempt.
• It is productive because Rachel can withdraw money from the account at any time without penalty.
• It is not productive because as Rachel's earnings grow over time, she'll likely reach a higher marginal tax rate during retirement

Question 9

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Which of the following statements is true of an umbrella policy?

• It provides compensation to the family members if the homeowner dies.
• It provides protection from identity theft at no extra premium.
• It provides blanket insurance coverage for all liabilities.
• It insures valuable assets such as art, collectibles, and jewelry by charging an additional fee.

Question 10

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How does a limited power of attorney (POA) differ from a durable power of attorney (POA)?

• A limited POA remains valid until the maker's death, whereas a durable POA is valid only for a short specified time.
• A limited POA terminates when the maker becomes incapacitated, whereas the durable POA remains effective even if the maker becomes incapacitated.
• A limited POA authorizes an agent to make emergency medical decisions, whereas a durable POA does not authorize the agent to make medical decisions.
• A limited POA comes into effect after the maker becomes incapacitated, whereas the durable POA terminates once the maker becomes incapacitated.

Question 11

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Which of the following statements correctly describesprobate?

• Probate refers to the disposal of disclaimed property as per the order of the executor of a will.
• Probate refers to the process that involves obtaining a deceased person's taxes from their legal heirs.
• Probate refers to the execution of a will under court supervision.
• Probaterefers to the process of hiring an attorney to draft a will for the deceased individual's property.

Question 12

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Rachel's employer pays toward her defined contribution plan, which has a vesting period of five years. This is the time she must wait before she can claim the company's contributions as her own.

If Rachel quits the company after two years, what effect will her resignation have on her retirement plan?

• She is entitled to the employer contributions for the next three years.
• She will lose all the money that her employer contributed.
• She is prohibited from participating in defined contribution plans at any future employers.
• She is entitled to the employer contributions from the first two years.

Question 13

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Which of the following is true of long-term disability insurance?

• It comes into effect after the insured has reachedage 65.
• It becomes effective after you cannot work for six to 12 months.
• It will replace a portion of a person's salary for three to 12 months after an injury.
• The cost of the premium decreases with the extension of the coverage period.

Question 14

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Eli is a 24-year-old freelance writer. He experiences periods of unemployment and lives on a tight budget. He recently bought term life insurance and declared his parents as the beneficiaries.

Which of the following is true about Eli's situation?

• His parents will have to pay taxes on the death benefits at the time of payout.
• He will be required to renew the policy every month because of his fluctuating employment.
• His parents will receive the face value of the policy in the event of Eli's death.
• His annual insurance premium will stay the same over the life of the insurance policy.

Question 15

At which point in life should an individual use their agility skill and start thinking about purchasing a long-term care insurance policy?

• When an individual celebrates their 50th birthday
• When an individual is planning for their wedding expenses
• When an individual applies for higher education
• When an individual purchases their first home

Question 16

Yara receives a call stating that there has been some unusual activity in her credit report and that they would like to help Yara verify the account.

What should Yara do next in the given situation?

• Yara should disclose only her Social Security number to the caller and ask them to verify the account details.
• Yara should provide the caller with her credit card details and request the caller to email her a copy of their findings.
• Yara should stop using her credit and debit cards until she obtains more information.

Question 17

Which of the following results from filing frequent claims against an automobile insurance policy?

• The policyholder's driving record shows markedimprovement.
• The policyholder's credit score increases.
• The policyholder begins topay a higher premium.
• The policyholder sees a decrease in theirdeductible amount.
• ould refrain from providing her account details and freeze her credit.