Cwmc Module 18: Insurance Competency Test
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This quiz is part of LFE Institute's CWMC (Certified Workplace Money Coaching) course. It will test your proficiency in the Insurance Module (Module 18) of the program. The questions are all multiple choice, and are designed to be a review of this Module. Let LFE know when you've successfully completed this test and are ready to begin the next Module.
Correct answers required for passing grade: 13/15
- 1.
CWMC Module 18 on Insurance is NOT designed to teach Money Coaches:
- A.
How to prepare employees to make wise insurance choices
- B.
Everything they need to know about insurance
- C.
Ways to avoid making costly mistakes when purchasing insurance
- D.
Basic insurance terminology
- E.
About the types of insurance protection available
Correct Answer
B. Everything they need to know about insuranceExplanation
The CWMC Module 18 on Insurance is not designed to teach Money Coaches everything they need to know about insurance. The module may cover topics such as how to prepare employees to make wise insurance choices, ways to avoid making costly mistakes when purchasing insurance, basic insurance terminology, and the types of insurance protection available. However, it does not aim to provide a comprehensive understanding of every aspect of insurance.Rate this question:
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- 2.
CWMC Module 18 on Insurance IS designed to:
- A.
Increase referrals for the nation’s top 10 insurance agents
- B.
Enable Money Coaches to inform employees how to become experts on insurance
- C.
Explain tax benefits of the Stimulus Plan
- D.
Empower employees to learn how to make smart insurance decisions
- E.
Help individuals find employment in the insurance field
Correct Answer
D. Empower employees to learn how to make smart insurance decisionsExplanation
CWMC Module 18 on Insurance is designed to empower employees to learn how to make smart insurance decisions. This means that the module aims to provide employees with the knowledge and skills necessary to understand insurance policies, coverage options, and make informed decisions that best suit their individual needs. By empowering employees in this way, they can feel confident in their ability to navigate the insurance landscape and make choices that will protect their financial well-being.Rate this question:
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- 3.
Which of the following is NOT a type of insurance an employee would consider?
- A.
Auto
- B.
COBRA
- C.
Home
- D.
OSHA
- E.
Pet
Correct Answer
D. OSHAExplanation
The question asks for a type of insurance that an employee would NOT consider. OSHA stands for the Occupational Safety and Health Administration, which is a government agency responsible for ensuring safe and healthy working conditions. OSHA is not a type of insurance, but rather a regulatory body that sets and enforces workplace safety standards. Therefore, OSHA is the correct answer as it does not fall under the category of insurance options that an employee would typically consider.Rate this question:
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- 4.
One downside of shopping for insurance exclusively on the Internet is:
- A.
Comparing different rates
- B.
Learning more about the companies providing the solutions
- C.
Inability to meet and interview an agent
- D.
Obtaining opinions and reviews of insurance companies
- E.
Evaluating features offered by various carriers
Correct Answer
C. Inability to meet and interview an agentExplanation
The downside of shopping for insurance exclusively on the Internet is the inability to meet and interview an agent. When shopping online, there is no opportunity to have face-to-face interaction with an agent who can provide personalized advice and guidance based on individual needs and preferences. Meeting an agent allows for a more comprehensive understanding of the insurance options available and the ability to ask specific questions. Without this interaction, it may be more challenging to make an informed decision about insurance coverage.Rate this question:
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- 5.
Which of the following statements about auto insurance rates is true?
- A.
Sporty, high performance vehicle coverage costs may be 2–3 times higher than standard cars
- B.
Age is not a factor in insurance rates
- C.
Clean driving records used to mean lower fees, but this is no longer the case
- D.
Money Coaches are to provide the single best solution when it comes to buying insurance
- E.
The minimum amount of insurance required in your state is typically enough
Correct Answer
A. Sporty, high performance vehicle coverage costs may be 2–3 times higher than standard carsExplanation
Sporty, high performance vehicle coverage costs may be 2–3 times higher than standard cars. This is because insurance companies consider these types of vehicles to be at a higher risk for accidents and theft. They are often more expensive to repair or replace, and their owners may be more likely to engage in risky driving behaviors. As a result, insurance companies charge higher premiums to offset the increased risk.Rate this question:
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- 6.
Which of the following factors affect the cost or amount of life insurance purchased? (check all that apply)
- A.
A person’s career
- B.
Whether or not a person is a single parent
- C.
A person’s overall physical health
- D.
Whether or not the person’s parents or siblings still alive and, if not, the manner in which they passed away
- E.
None of the above; cost of life insurance is generally based on the age of the individual
Correct Answer(s)
A. A person’s career
B. Whether or not a person is a single parent
C. A person’s overall physical health
D. Whether or not the person’s parents or siblings still alive and, if not, the manner in which they passed awayExplanation
The cost or amount of life insurance purchased is affected by a person's career, whether or not they are a single parent, their overall physical health, and whether or not their parents or siblings are still alive and, if not, the manner in which they passed away. These factors can influence the risk assessment made by the insurance company, as they indicate the potential financial impact of the insured person's death. The age of the individual is not the sole determining factor for the cost of life insurance.Rate this question:
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- 7.
Insurance fraud can be divided into a "hard" or a "soft" fraud. Which of the following frauds would be classified as "soft"?
- A.
Staging a car accident
- B.
Padding an insurance claim by telling “white lies”
- C.
Arson
- D.
Medicare fraud via illegal billing practices
- E.
Falsely reporting a vehicle as stolen
Correct Answer
B. Padding an insurance claim by telling “white lies”Explanation
Padding an insurance claim by telling "white lies" would be classified as "soft" fraud. Soft fraud typically involves exaggerating or embellishing the truth in order to increase the value of an insurance claim. In this case, the individual is not completely fabricating the claim but is instead adding small false details or exaggerating existing ones. This type of fraud is considered less severe than hard fraud, which involves intentionally causing or staging an incident, such as a car accident or arson, in order to make an insurance claim. Medicare fraud and falsely reporting a vehicle as stolen are also examples of hard fraud.Rate this question:
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- 8.
Which of the following sources can be copied without violating copyright laws (plagiarizing information)?
- A.
Anything found on the Internet
- B.
U.S. government Web sites, even if the original information is linked to and came from a private site
- C.
Books that have been in print for more than 10 years
- D.
Cited works in the public domain
- E.
All of the above
Correct Answer
D. Cited works in the public domainExplanation
Cited works in the public domain can be copied without violating copyright laws because they are not protected by copyright. Works in the public domain are those whose intellectual property rights have expired, been forfeited, or are inapplicable. This means that anyone can use, copy, and distribute these works freely without permission or payment.Rate this question:
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- 9.
Once the first insurance premium is paid, regardless of the type of plan, a consumer should make sure he/she receives:
- A.
The agent’s cell and home phone numbers
- B.
An online rate comparison
- C.
Verbal commitments
- D.
A written policy
- E.
Business cards with the insurance company's logo and contact information
Correct Answer
D. A written policyExplanation
After paying the first insurance premium, it is important for the consumer to receive a written policy. This is crucial as it provides a legal and binding document that outlines the terms and conditions of the insurance coverage. It serves as proof of the agreement between the consumer and the insurance company, ensuring that both parties are aware of their rights and obligations. Verbal commitments, agent's contact information, and business cards may be helpful for communication purposes, but they do not hold the same weight as a written policy in terms of legal protection and clarity.Rate this question:
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- 10.
When an insurance agent inserts extra coverage in a policy without the client's authorization, this practice is known as:
- A.
Pinning
- B.
Sliding
- C.
Puffing
- D.
Caking
- E.
Passing
Correct Answer
B. SlidingExplanation
Sliding refers to the unethical practice of insurance agents adding additional coverage to a policy without the client's knowledge or consent. This is done by "sliding" the extra coverage into the policy, often with the intention of increasing the premium and generating more commission for the agent. It is considered deceptive and illegal, as it takes advantage of the client's lack of awareness and can result in them paying for coverage they did not agree to.Rate this question:
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- 11.
A consumer who purchases a $100,000 "whole" life insurance policy because of the additional "cash" component will generally: (check all that apply)
- A.
Receive the cash, OR beneficiaries will receive $100,000 of the life insurance, but not both
- B.
Pay up to four times more than an average term life insurance policy
- C.
Have an agent with a very good sales pitch
- D.
Be able to pass the cash value that has built up on to his/her beneficiaries
Correct Answer(s)
A. Receive the cash, OR beneficiaries will receive $100,000 of the life insurance, but not both
B. Pay up to four times more than an average term life insurance policy
C. Have an agent with a very good sales pitchExplanation
A consumer who purchases a "whole" life insurance policy with a cash component will generally have the option to either receive the cash value or have their beneficiaries receive the $100,000 life insurance payout, but not both. Additionally, they can expect to pay up to four times more than they would for an average term life insurance policy. It is also likely that they were influenced by an agent with a very good sales pitch.Rate this question:
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- 12.
Even though Money Coaches don't make recommendations, one insurance policy consumers might consider dropping when money is tight is:
- A.
Life insurance, if they are in good health and are parents of young children
- B.
Auto insurance, if the car is old and not worth a lot
- C.
Health insurance, if the family is fairly healthy
- D.
Homeowner’s insurance, if they don’t live in a flood plain
- E.
None of the above are acceptable to drop
Correct Answer
E. None of the above are acceptable to dropExplanation
It is not recommended to drop any of the mentioned insurance policies even when money is tight. Life insurance is important for parents of young children as it provides financial security in case of unexpected events. Auto insurance is necessary regardless of the value of the car, as accidents can still occur. Health insurance is crucial to cover medical expenses, even if the family is fairly healthy. Homeowner's insurance is important to protect against various risks, not just flood damage. Therefore, dropping any of these insurance policies is not advisable.Rate this question:
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- 13.
Insurance agents generally make the highest commissions on which TWO of the following products? (check all that apply)
- A.
Auto insurance
- B.
Homeowners insurance
- C.
Whole life insurance
- D.
Pet insurance
- E.
Annuities
Correct Answer(s)
C. Whole life insurance
E. AnnuitiesExplanation
Insurance agents generally make the highest commissions on whole life insurance and annuities. This is because both products tend to have higher premiums and longer policy terms, resulting in higher commission payouts for agents. Whole life insurance provides coverage for the entire lifetime of the insured and typically includes a cash value component, while annuities are investment products that provide a regular income stream for a specified period or for life.Rate this question:
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- 14.
8To save money, consumers may be able to get by without which one of the following types of insurance?
- A.
Disability insurance for a healthy young father
- B.
Full coverage auto insurance (collision AND liability) on an older car
- C.
Life insurance on a non-working mother
- D.
Renter’s insurance for young consumers renting their first house or apartment
- E.
Health insurance if it’s currently unaffordable
Correct Answer
B. Full coverage auto insurance (collision AND liability) on an older carExplanation
Full coverage auto insurance (collision AND liability) on an older car may not be necessary to save money because the car is older and may not have a high value. Liability insurance is required by law in most states, but collision coverage is optional. If the car is not worth much, it may be more cost-effective to only have liability insurance to cover damages to other vehicles or property in case of an accident.Rate this question:
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- 15.
8Which of the following terms would a Money Coach be LEAST likely to use and explain in an insurance-related Money Coaching response?
- A.
Beneficiary
- B.
COBRA
- C.
Policy
- D.
SHRM
- E.
Premium
Correct Answer
D. SHRM -
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Apr 26, 2023Quiz Edited by
ProProfs Editorial Team -
Jul 14, 2009Quiz Created by
Alice Whinnery
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