Smart Money Certification Smc-e: Sample Employee Quiz

Explanation
This statement is false because even if you only pay cash for purchases, your credit score still plays a role in various aspects of your financial life. Your credit score is used by lenders to determine your creditworthiness when you apply for loans or credit cards. It can also impact your ability to rent an apartment, get insurance, or even secure certain job positions. Therefore, having a good credit score is important regardless of whether you pay cash for purchases or not.

Explanation
The statement is false because the study by the GAO found that a forced transfer of retirement funds does not protect an employee's future retirement savings.

Explanation
An Income Deduction Order (IDO) and garnishments can indeed reduce wages by as much as 50% in some states. This means that if an individual has an IDO or garnishment against them, a significant portion of their income can be taken away to satisfy their debts or obligations. This can have a significant impact on their financial situation and ability to meet their expenses. Therefore, the statement "True" accurately reflects the potential impact of IDOs and garnishments on wages in certain states.

Explanation
The statement is false because the IRS's Fresh Start program does not provide taxpayers with the ability to immediately remove tax liens from their credit reports. The program offers options for taxpayers to settle their tax debts and potentially avoid tax liens, but it does not directly remove them from credit reports. Tax liens can remain on credit reports for up to seven years, even after the debt has been resolved through the Fresh Start program.

Explanation
The statement is true because the CDC's Yellow Book does indeed provide cautions and helpful tips for individuals who are considering medical tourism in order to save money on medical and dental procedures. The Yellow Book serves as a guide for travelers and provides information on various health risks, precautions, and recommendations for medical tourism destinations. It aims to inform individuals about the potential risks and challenges associated with seeking medical treatment abroad, such as the quality of care, infection control, and post-operative complications. Therefore, the statement is correct.

Explanation
A small good-faith payment can "resurrect" a zombie debt because making any payment, no matter how small, can reset the statute of limitations on the debt. This means that the clock starts ticking again, giving the creditor more time to legally pursue the debt. So, even if the debt was about to expire, making a payment can revive it and allow the creditor to continue their collection efforts.

Explanation
Equity investments do not provide a fixed rate of growth or an estimated date for the return of principal. Unlike fixed-rate investments such as bonds or fixed deposits, equity investments involve purchasing shares of a company's stock, and the returns are not fixed or guaranteed. The growth rate and the timing of the return of principal in equity investments are dependent on the performance of the company and the stock market. Therefore, the statement is false.

Explanation
The statement is false. A debt that is time-barred means that the statute of limitations has expired, which varies by state and type of debt. Once the statute of limitations has expired, bill collectors cannot legally sue the debtor to collect the debt. However, they may still attempt to collect the debt through other means, such as contacting the debtor or reporting it to credit bureaus. The timeframe of 90 days mentioned in the statement is not accurate.

Explanation
Primary care doctors are not required to accept patients solely based on whether they are covered by one of the ACA healthcare insurance plans. While the Affordable Care Act (ACA) does aim to increase access to healthcare, it does not mandate that doctors accept all patients with ACA coverage. Doctors still have the discretion to choose which patients they will accept based on various factors such as their own capacity, specialty, and individual practice policies. Therefore, the statement that primary care doctors must accept patients as long as they are covered by one of the ACA healthcare insurance plans is false.

Explanation
If aging parents fail to enroll in Medicare Part B when eligible, they could face a penalty every month for the rest of their lives. This penalty is imposed because Medicare Part B is the medical insurance component of the Medicare program, which covers services such as doctor visits, outpatient care, and medical supplies. It is important for aging parents to enroll in Part B when eligible to avoid this penalty and ensure they have access to necessary medical services.

Explanation
Some insurance carriers consider certain breeds of dogs to be high-risk and may charge higher premiums or refuse to issue a policy altogether to homeowners who own these breeds. This is because these breeds are perceived to have a higher likelihood of causing property damage or injuries. Therefore, it is true that some insurance carriers will charge more or refuse to provide coverage to homeowners with certain breeds of dogs.

Explanation
The statement is false because individuals can actually set aside up to $3,600 (for individuals) or $7,200 (for families) pre-tax dollars in their Health Savings Accounts (HSAs) to pay for healthcare costs. The given amount of $5,000 is incorrect.

Explanation
Social Security checks cannot be garnished for non-payment of private student loans. Social Security benefits are protected by federal law and are generally exempt from garnishment for most debts, including private student loans. However, there are certain exceptions where Social Security benefits can be garnished, such as for unpaid federal student loans or unpaid taxes. But in the case of private student loans, Social Security checks cannot be garnished.

Explanation
Protecting the rights and future guardianship of children is indeed critical in the event of divorce or the death of a de facto parent. Divorce or the death of a de facto parent can have significant implications for the well-being and future of children involved. Ensuring that their rights are protected and that appropriate guardianship arrangements are in place is essential for their overall welfare and stability.

Explanation
The statement is true because big-box stores like Sam's or Costco are regulated by laws that require them to disclose their standard prescription drug prices to everyone, regardless of whether they are a member or not. This ensures transparency and equal access to pricing information for all individuals.

Explanation
A TOD (Transfer on Death) in some states allows individuals to designate beneficiaries for their assets, such as bank accounts or securities, without the need for probate. This means that upon the individual's death, the assets automatically transfer to the designated beneficiaries. This can be a convenient and efficient way to pass on assets to beneficiaries, as it avoids the lengthy and costly probate process. Therefore, the statement that a TOD in some states can be an easy way to transfer assets to beneficiaries without going through probate is true.

Explanation
The ADV form, also known as the Form ADV, is a document that investment advisors are required to file with the SEC. It provides important information about the advisor, including their registration status. By reviewing the ADV form, investors can verify that an advisor is indeed registered with the SEC. This helps to establish trust and confidence in the advisor's legitimacy and compliance with regulatory requirements. Therefore, the statement that an ADV form can verify and give investors confidence that an advisor is registered with the SEC is true.

Explanation
This statement is true because having a will is a common practice among Americans to ensure that their assets are distributed according to their wishes and that their dependent children are taken care of after their death. A will is a legal document that allows individuals to specify their desires regarding the distribution of their property and the appointment of guardians for their children. It provides clarity and helps avoid potential disputes or confusion among family members. Therefore, it can be concluded that all Americans have a will to address these important matters.

Explanation
Working with a debt settlement firm does not guarantee the prevention of liens, lawsuits, and garnishments for those with a significant amount of debt. While a debt settlement firm may negotiate with creditors to reduce the amount owed, it does not have the power to prevent legal actions such as liens, lawsuits, or garnishments. These actions can still be pursued by creditors if they choose to do so. Therefore, the statement is false.

Explanation
Mortgage insurance benefits do not increase over time as the value of the home increases. Mortgage insurance is designed to protect the lender in case the borrower defaults on the loan. It does not provide any additional benefits or increase in value based on the appreciation of the home. Therefore, the statement is false.

Explanation
Most taxpayers can receive a Saver's Credit for contributions made to their retirement plan at work. This is because the Saver's Credit is a tax credit designed to incentivize low to moderate-income individuals to save for retirement. It allows eligible taxpayers to claim a credit on their tax return based on a percentage of their retirement plan contributions. Therefore, if a taxpayer contributes to their retirement plan at work, they may be eligible to receive this tax credit.

Explanation
Cutting up old credit cards does not directly increase your credit score. While it may help you avoid accumulating more debt, closing old credit card accounts can actually have a negative impact on your credit score. This is because it reduces your overall available credit and can shorten the length of your credit history. To increase your credit score, it is better to focus on making timely payments, keeping credit card balances low, and maintaining a good credit utilization ratio.

Explanation
The statement is false because purchasing life insurance for a non-working parent of small children is important. Even if the primary wage earner is covered, the non-working parent still contributes to the family by providing care and support for the children. In the event of their untimely death, the family would suffer financially without life insurance to cover the non-working parent's contributions. Therefore, it is crucial to have life insurance for both parents to ensure the family's financial security.

Explanation
Employees capitalize on the benefits of dollar cost averaging when they invest in their retirement plan at work. Dollar cost averaging is a strategy where an investor regularly invests a fixed amount of money over a long period of time, regardless of market conditions. By investing in their retirement plan at work, employees can take advantage of this strategy as they consistently contribute to their investment portfolio over time. This helps to mitigate the impact of short-term market fluctuations and potentially leads to long-term growth in their retirement savings. Therefore, the statement is true.

Explanation
Listing both individuals on a reverse mortgage does not necessarily increase retirement income or protect their ability to remain in their home. While it is true that at least one individual needs to be 62 or older to qualify for a reverse mortgage, listing both individuals does not guarantee any additional benefits. The amount of income received from a reverse mortgage is based on factors such as the age of the youngest borrower and the value of the home, not on listing both individuals. Additionally, listing both individuals may actually increase the risk of losing the home if one of them passes away or needs to move to a care facility. Therefore, the statement is false.