FCS 233: FINAL EXAM
95 Cards in this Set
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5 opportunity cost strategies to consider when buying
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1. Pay higher price by using credit to buy "now"
2. Buy unknown (possibly poor quality brands)
3. Select brands that may not be as servicable
4. Ordering online may be harder to return or service
5. Compare alternatives
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7 "practical purchasing" strategies suggested
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1.Avoid impulse purchase,
2. timing,
3. store selection,
4. brand comparison,
5. read the labels,
6. price comparison,
7. use rebates and coupons
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Type of warranty that is most complete offered with purchases
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Full Warranty
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Type of warranty only covers a portion of the product replacement or repair
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limited warranty
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What is a purchased extended warranty called?
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service contract
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What were the 6 information sources discussed that might assist you with a consumer purchase?
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1.Family
2. friends
3. consumer report
4. magazines,
5. websites
6. organizations
7. government websites
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What were the 4 possible steps to take if you have a complaint about a product?
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-Take it back to the store,
-contact the company
-hire a lawyer
- take it to the government or state level
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loan obtained to purchase land/buildings with property purchased is pledged as security is called a _______?
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mortgage
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about ____ of americans own a home
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2/3
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some experts say to use the ___ times annual household income guideline as your home price
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3x
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Other experts suggest ___ times income if a ___% down payment is made
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4x, 20%
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Some mortgages require total long-term payments (car, college, credit) not to exceed ___% of income
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36%
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Some say monthly housing (P + I, Tax, Insurance) be equal or <____% of income, even without other debt
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28%
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most commonly mortgages are usually ___ years to ___ years
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15, 30
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a real estate salesperson in IL must be licensed by the ____
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state
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what is the common real estate commission paid to relators? who pays the fees?
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6-7% paid by the seller
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FSBO
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For Sale by Owner; do not have a real estate agent helping them on the sale of a property
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when a relator represents both the buyer and the seller it is called a ____ agency
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dual
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why is it "good practice" to be bank "pre-certified" before making an offer?
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shows you are prepared and have access to the funds
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Who should you hire to check the physical condition of a home as you are buying?
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Licensed Home Inspector
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banks usually require an ____ of the property if a loan is involved in buying a house
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appraisal
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money paid with an "offer" is called "____" money and if offer is accepted $ is kept by seller's _____
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-earnest
-broker
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what is another name commonly used instead of the word "title"
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deed
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Why does a buyer pay for title insurance? What does it guarantee?
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-To assure the property is owned by the seller "free & clear" of any problems
-Usually "exams" done by title insurance company
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If “mechanicals” (furnace, A/C, roof) are guaranteed by insurance, that is usually called a...
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Home warranty
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About _______% of all home buyers use mortgage to buy
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90%
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Who’s name is on the title of property in IL (even if there is borrowed money)?
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the buyer/ Mortgagor
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What does the bank do to a title to insure that a future buyer knows they may be owed money?
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Put lein on house
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to get lower APR loan rates a bank may require money paid up front to "buy down" loan called _____ ____
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discount points
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A ____________allows an early pay off of loan before it is mature
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Prepayment privilege
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a bank selling a group of mortgages to a government backed organization uses a practice called ____.
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bundling
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What are the 2 most common government agencies used for this? (Nicknames)
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Fannie Mae and Freddie Mac
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The day you take possession of a house is called the ___________.
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Closing Point/Day
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Insurance
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Protection against financial loss related to health, flood, life, and
property
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policy
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written contract that defines coverage
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Premium
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the amount a policyholder must pay for insurance coverage each year
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insured
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a person coverd by an insurance policy
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Policy Holder
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The person or company buying the policy
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Deductible
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the amount you have to pay before your insurance company will pay
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Be able to recognize the 4 ways to address “risks” we encounter in life – (likely recognize examples)
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Risk Avoidance
Risk Reduction
Risk Assumption
Risk Shifting
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risk avoidance
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what you can do to avoid risk
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risk assumption
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having insurance
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risk reduction
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reduce risk; having good health etc.
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risk shifting
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what policies can be purchased
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2 main categories of home insurance coverage?
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-Property insurance:physical damages
-Liability insurance: legal responsibilities for others losses
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Be able to recognize the 3 types of liability insurance from examples given
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Strict (cause problems for others), --Vicarious (responsible for actions of others)
-Negligence (failure to take reasonable care)
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Umbrella policy
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Additional level of coverage to protect your assets. Used after other insurance totals have been exhausted.
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What 3 coverage areas would lead you to want "renters' insurance?
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-Personal property protection
-Personal liability
-Adding living expenses
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What are examples of "specialized" coverage?
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-Flood
insurance
-Sewer/drain back up insurance
-Earthquake insurance
("Endorsements" to a policy)
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What are "exclusions" on a policy and some examples?
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-Jewelry limits
-Animals
-Not licensed vehicles
-Special radios
-Aircrafts
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Why is “replacement” cost coverage a different amount than the market value of my home?
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The lot still has value
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Why is it uncommon to have 100% replacement cost coverage
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Because usually there is something salvageable
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What is the part of a home policy called that covers the furniture, clothing, etc.?
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Personal property
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What are the 6 listed items that can affect the cost of your home insurance?
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-Location
-Type of Structure
-Coverage
-Deductible
-Discounts for auto & home coverage
-annual vs. monthly payments
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What are the 2 main coverage categories for auto insurance?
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Bodily Injury Coverage
-Property Damage Coverage
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What do the 3 numbers mean commonly used with auto insurance?
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100 (one person gets)
300 (maximum liability)
50 (property liability)
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What are the IL minimum auto coverage levels?
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20/40/15
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What are 3 advantages to No fault” insurance and why hasn’t it been widely adopted?
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-Faster claims
-Less court involvement
-Doesn't matter who is at fault
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What does “subrogation” mean on an insurance policy?
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Your insurance company may try to recover the loss from the person who caused it
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What factors are used to calculate auto insurance costs for a consumer?
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-Vehicle; age, model, features
-Where you live
-How far you drive
-Driver; age, driving record, accident record, & credit history
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How can I save money on car insurance?
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-Safety record
-Price comparison
-Paying annually
-Increased deductible
-Package w/ home poilcy
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What are the 5 contributing factors that are causing health care costs to rise in the US?
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-People living longer
-Baby boomers in retirement
-Medical treatments that are expensive
-Fraudulent activity
-Growing number of uninsured
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Be able to identify types of health insurance coverage from examples given in a multiple choice format
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-Comprehensive major medical-all inclusive plan with low deductibles
-Hospital indemnity-may pay cash to patient and helps with expenses beyond standard coverage
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the policyholder is often asked to pay part of the costs of treatment and this is called the _____
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copayment
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What is the purpose of Long Term care Insurance and why are there different prices for it?
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-Extended benefits for longer health issues
-Depends on when you start the policy
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What do the words Reasonable and Customary mean in a health policy?
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Means tried to prevent overcharging
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What were the 4 category sources of Health Insurance covered in class?
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-Private companies
-federal government
-HMO
-PPO
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what is the government health care program for elderly? why administers it?
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medicare, federal government
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What are the 4 parts of the Medicare system?
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Part A: Hospital
Part B: Doctors
Part C: Private Providers
Part D: Drugs
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what is the government health care program for low/no income families? Who administers is?
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-medicaid
-states
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What are some of the key components of the Patient Protection & Affordable Care Act of 2010?
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-Extension of coverage for kids until 26
-insured regardless of condition
-force people who don’t have insurance to buy it
-makes insurance more available to those who can’t afford it
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What type of insurance provides income during temporary or permanent injuries/illnesses?
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Disability insurance
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What are the odds of a worker needing this insurance before age 65?
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1 out of 7 (14%)
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what are 4-5 key questions to be answered before purchasing this insurance?
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-waiting period
-amount of benefits
-accident/sickeness coverage
-duration
-renewability
-% of regular income
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What is the plan offered through employment, administered by states to assist after injury on the job?
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Workers Compensation
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a legal declaration of a person’s mind as to the disposition of his/her property after death
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testator???
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the legal procedure proving a will to be valid or invalid
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Probate
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sometimes called the "i love you" will leaves everything to the spouse
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?????
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leaves one-half of the estate to a spouse
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??
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completely handwritten will prepared by yourself
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holographic will
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is a will usually prepared with the assistance of an attorney
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formal will
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person identified in a will to receive property
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beneficiary
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a person specifically names to follow your property distribution instructions
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trustee
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a person who assumes responsibility for children after death of a parent
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guardian
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a named person who cares for property after a person’s death
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executor
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A supplement or addition to a will that modifies, explains or adds to its provisions
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??Codicil
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a written and signed agreement occasionally prepared before marriage
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prenuptial agreement
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A set of instructions written while well, to instruct medical staff about your wishes if you become ill or incapacitated
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Living will
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legal document appointing someone to act on your behalf – can be written for specific aspects of your life (business or health related) or for your life (including health)
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power of attorney
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property jointly owned 50/50 and passes to the other owner with no tax at death
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joint ownership with right of survival
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Jointly owned with your share (as a proportion) for taxes, but your share is passed to your heirs and not to the other owner
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tenancy in common
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a form of tax levied after death to a person’s assets as they transfer to an heir
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Estate taxes/Death taxes
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a state level tax that is levied on the heirs as they receive an estate share
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inheritance tax or estate tax
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federal and state taxes on assets given to others (while alive)
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Gift taxes
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Gift given to a government recognized entity (churches, educational institutions, 501 (c)3 foundations, etc.
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Charitable Gifts
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FCS 233: EXAM 1