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Questions and Answers
Which type of credit is typically provided for a longer repayment period and includes interest charges?
Which type of credit is typically provided for a longer repayment period and includes interest charges?
Revolving open-end credit helps consumers avoid accumulating debt.
Revolving open-end credit helps consumers avoid accumulating debt.
False
What is the maximum borrowing capability typically associated with revolving open-end credit?
What is the maximum borrowing capability typically associated with revolving open-end credit?
$1,000 to $10,000
Credit that is issued for a very short time, usually for thirty days or less, is called __________.
Credit that is issued for a very short time, usually for thirty days or less, is called __________.
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Match the types of credit with their descriptions:
Match the types of credit with their descriptions:
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What is a significant disadvantage of using credit cards?
What is a significant disadvantage of using credit cards?
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Installment loans can sometimes require only interest payments until the maturity date.
Installment loans can sometimes require only interest payments until the maturity date.
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What common consumer behavior can occur due to the availability of credit cards?
What common consumer behavior can occur due to the availability of credit cards?
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What should you do if the vehicles involved in an accident are drivable?
What should you do if the vehicles involved in an accident are drivable?
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The appraisal provision allows for disputes over the amount of damage to be resolved by an independent appraisal process.
The appraisal provision allows for disputes over the amount of damage to be resolved by an independent appraisal process.
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What is the role of the umpire in the appraisal process?
What is the role of the umpire in the appraisal process?
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The MMDA Hotline number for assistance is ______.
The MMDA Hotline number for assistance is ______.
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Match the following steps in an accident response process:
Match the following steps in an accident response process:
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Who pays for the umpire's expenses in an appraisal process?
Who pays for the umpire's expenses in an appraisal process?
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You should leave the scene of the accident immediately after calling for assistance.
You should leave the scene of the accident immediately after calling for assistance.
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What should be exchanged with the other driver after an accident?
What should be exchanged with the other driver after an accident?
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What does a higher Claim Settlement Ratio (CSR) indicate?
What does a higher Claim Settlement Ratio (CSR) indicate?
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Financial strength is not important when choosing a life insurance company.
Financial strength is not important when choosing a life insurance company.
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What is the significance of online tools and calculators when selecting a life insurance company?
What is the significance of online tools and calculators when selecting a life insurance company?
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A sound insurance company provides peace of mind knowing your beneficiaries will be taken care of, indicating financial _____.
A sound insurance company provides peace of mind knowing your beneficiaries will be taken care of, indicating financial _____.
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Match the following terms with their definitions:
Match the following terms with their definitions:
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What is the primary purpose of comparing premium rates among different insurers?
What is the primary purpose of comparing premium rates among different insurers?
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The Personal Auto Policy (PAP) includes provisions for car-sharing platforms like Uber.
The Personal Auto Policy (PAP) includes provisions for car-sharing platforms like Uber.
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What recent changes were made to the Personal Auto Policy (PAP) in 2018?
What recent changes were made to the Personal Auto Policy (PAP) in 2018?
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Which factor is NOT considered when determining the cost of life insurance?
Which factor is NOT considered when determining the cost of life insurance?
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The traditional net cost method accounts for all factors influencing the cost of life insurance.
The traditional net cost method accounts for all factors influencing the cost of life insurance.
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What is the primary purpose of the entire-contract clause in life insurance policies?
What is the primary purpose of the entire-contract clause in life insurance policies?
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The __________ method is one of the two cost methods used to determine the cost of life insurance.
The __________ method is one of the two cost methods used to determine the cost of life insurance.
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Match the following types of life insurance with their description:
Match the following types of life insurance with their description:
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If two separate life insurance policies are established, what is likely to happen to the cost?
If two separate life insurance policies are established, what is likely to happen to the cost?
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Home service life insurance is synonymous with industrial life insurance.
Home service life insurance is synonymous with industrial life insurance.
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Name the two states where Savings Bank Life Insurance was first offered.
Name the two states where Savings Bank Life Insurance was first offered.
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Which type of family is characterized by a divorced spouse with children remarrying?
Which type of family is characterized by a divorced spouse with children remarrying?
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A sandwiched family refers to a scenario where a child supports both their younger and older generations.
A sandwiched family refers to a scenario where a child supports both their younger and older generations.
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What is the primary need for life insurance in a single-parent family?
What is the primary need for life insurance in a single-parent family?
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In a blended family, additional children may be born after the ______.
In a blended family, additional children may be born after the ______.
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What may cause considerable economic insecurity for families with two income earners?
What may cause considerable economic insecurity for families with two income earners?
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Single parents generally do not require considerable amounts of life insurance.
Single parents generally do not require considerable amounts of life insurance.
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What is the key agreement in a life insurance policy?
What is the key agreement in a life insurance policy?
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Match the type of family with their characteristic need for life insurance:
Match the type of family with their characteristic need for life insurance:
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What should you do first after an accident?
What should you do first after an accident?
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You should move your vehicle off the road immediately after an accident.
You should move your vehicle off the road immediately after an accident.
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What should you do after ensuring safety at the accident scene?
What should you do after ensuring safety at the accident scene?
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Call the MMDA Hotline _____ for medical assistance.
Call the MMDA Hotline _____ for medical assistance.
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What information should be exchanged with the other driver?
What information should be exchanged with the other driver?
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You should wait for investigators to arrive if you cannot move your vehicle.
You should wait for investigators to arrive if you cannot move your vehicle.
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What is the purpose of taking photographs at the accident scene?
What is the purpose of taking photographs at the accident scene?
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Study Notes
Credit
- Credit can be classified as non-installment, installment, or revolving open-end.
- Non-installment credit is typically for short-term periods (e.g., 30 days or less).
- Installment credit allows longer repayment periods (e.g., years). Interest is charged on the borrowed amount, and monthly payments include principal and interest.
- Revolving open-end credit (e.g., credit cards) allows consumers to borrow up to a pre-set maximum amount. Interest is charged on the remaining balance.
Advantages of using credit
- Build a good credit history, which can help access credit in the future for large purchases (e.g., homes, cars).
- Avoid delaying large purchases until savings are accumulated.
- Eliminate the need for carrying cash or writing checks.
Disadvantages of using credit
- High cost to use credit. Excessive spending and large accumulations of debt are potential downsides.
- Some consumers can develop poor spending habits when using credit cards, causing them to accumulate debt. Minimum payments can lead to escalating balances with high interest rates.
Credit Rights
- The Equal Credit Opportunity Act prohibits creditors from denying credit based on specific factors (e.g., age, gender, religion).
- Creditors must notify applicants whether they will receive credit within 30 days of applying.
- If credit is denied, the creditor must explain the reason for denial.
Credit History
- A record of how you've used credit, including late payments.
- Credit card use and bank loans are recorded.
- Utility use (e.g., water, electricity, telephone) also contributes to credit history. An initial deposit is often necessary to establish such accounts.
Credit Bureaus
- Provide credit reports detailing credit payment history (e.g., on-time payments, account balances, and late fees).
- Contain information from public records like bankruptcies or court judgments and inquiries from employers or companies.
- Important factor for obtaining credit as it influences interest rates. A good credit report results in lower interest charges.
Identity Theft
- Occurs when someone uses personal information (e.g., Social Security number, driver's license, or account numbers) without permission for personal gain.
- Criminals use stolen information to empty bank accounts or charge purchases to credit cards.
- Victims experience feelings of violation and insecurity from identity theft. Victims may face difficulties in employment or experience issues with taxes or loans.
Identity Theft Tactics
- Shoulder surfing, dumpster diving, skimming, and pretexting are common tactics.
- Phishing and Pharming are online variations of the aforementioned tactics.
- Abusing legitimate access to records (e.g., employees in various sectors) is a possible method.
- Criminal rings may plan and execute extensive identity theft.
Life Insurance
- Premature death is defined as the death of a person with outstanding financial obligations or the death of a person that creates significant business consequences.
- Families can experience significant financial hardship with premature death of a key provider.
- Family members may also face difficulties including costs associated with supporting dependents, educating children, and paying off mortgages.
- Business owners can face difficulties with the dissolution of a corporation or a significant reduction in income if business owners or managers were to pass away.
- Different family types (e.g., single, single-parent, two-parent/two-income with children, and blended/sandwiched) may experience varying financial impacts from a premature death.
Types of Life Insurance
- Term, Whole Life, Endowment.
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