Paychecks and Insurance
DIRECTIONS: Circle the correct answer. Each question is worth 1 point.
1. The most secure method for an employer to pay employees is to use:
a. / Direct depositb. / Payroll card
c. / Printed paycheck
d. / In-store credit
2. Which of the following is a type of insurance available for purchase to protect you from financial losses?
a. / Stock Market Lossesb. / Health Care Expenses
c. / Maintaining the price of your home
d. / Car repairs
3. A pay period can be defined as a
a. / Monthly schedule of work responsibilitiesb. / Schedule by which employers pay their employees
c. / Day that the pay check is delivered
d. / Length of working time that is actually taxes
4. The type of insurance that is the minimum required by law for automobiles is:
a. / Medical payment insuranceb. / Physical damage insurance
c. / Liability insurance
d. / Uninsured or underinsured motorists insurance
5. What is an employee required to complete when they begin a new job?
a. / Form W-2b. / Social Security form
c. / Form W-4
d. / Medicare form
6. Kim’s car is damaged when a tree falls on it. Which coverage will she need in order to replace her car?
a. / Collisionb. / Liability
c. / Comprehensive
d. / Underinsured
7. Net Income can be defined as the:
a. / total amount of money earned before deductions are taken outb. / length of time for which an employee’s wages are calculated
c. / actual amount of money received in the paycheck
d. / total amount of deductions withheld from the paycheck
8. The beneficiary of a life insurance policy is the individual who:
a. / purchased the policyb. / receives any proceeds if the insured person dies
c. / sold the insurance policy
d. / is the executor of the insured’s estate
9. Insurance is:
a. / an unpredictable event which leads to loss or damageb. / an arrangement between an individual and an insurer to protect the individual
c. / a fee paid to the insurer for protection under specified terms
d. / uncertainty about a situation’s outcome
10. A dependent is a person who:
a. / relies on the taxpayer for financial supportb. / relies on the government for their Social Security benefit check
c. / pays taxes for all the members of the family
d. / depends on their job for needed financial support to pay their expenses.
11. Disability insurance
a. / pays for damage you caused in an automobile accidentb. / replaces part of your income lost due to illness or injury
c. / covers hospital, surgical, and long term care needs
d. / protects the insured from loss when they are liable for injury to someone else.
12. A disadvantage of payroll cards is:
a. / lack of protection if the card is lost or stolenb. / ability to connect multiple cards to a single account
c. / numerous fees that can be charged for using the payroll card
d. / requirements to have a bank account in order to use the payroll card
13. Patty recently moved into a new apartment with her friend Emma. Who is responsible for purchasing the renter’s insurance?
a. / The property managerb. / Patty and Emma
c. / The building manager
d. / Guest who visit Patty and Emma
14. The government agency responsible for collecting federal taxes is the :
a. / United States Congressb. / Social Security Office
c. / Internal Revenue Service
d. / The Justice System
15. Renter’s insurance is not required but is a good idea because:
a. / The renter would be liable for their possessions if the rental unit caught on fireb. / The landlord’s insurance does not cover the renter’s personal possessions
c. / Landlords do not need to carry insurance policies that replace the tenant’s property
d. / All of the above
16. Federal and State Income Tax are paid on:
a. / Both unearned and earned incomeb. / Earned income only
c. / Unearned income only
d. / The amount calculated for FICA during each pay period
17. Tiffany was recently involved in a vehicle accident. In order to get her care fixed, her insurance company is requiring her to pay the first $500 of the repair bill because:
a. / She did not call her agent and report the accident quickly enoughb. / Her policy’s deductible is $500
c. / She will be reimbursed by the insurance company later
d. / The cost of the repairs is higher than her policy covers
18. Austin has just received his first paycheck. He worked 22 hours at his new job and is being paid $8.00 per hour. He calculated that his paycheck should be $176.00. His paycheck amount is almost 1/3 less than he expected. What is the most likely reason that Austin’s pay is less than he expected it to be?
a. / Austin calculated the hours he worked without deducting the hours he spent doing on-the-job training.b. / Austin neglected to deduct the excise tax paid on the uniforms he purchased to wear at his job.
c. / Austin neglected to deduct the amount required to pay income and payroll taxes.
d. / Austin’s employer made a mistake calculating the number of hours Austin worked during his first pay period.
19. It is recommended that an individual purchase life insurance when the:
a. / Individual has dependentsb. / Individual reaches the age of 50
c. / Individual flies in an airplane
d. / Individual gets their first job
20. Another name for Regulation E is:
a. / Internal Revenue Serviceb. / Electronic Fund Transfer Act
c. / Allowances
d. / Employment Eligibility Form
21. The government agency that writes the tax laws is:
a. / Internal Revenue Serviceb. / Social Security Administration
c. / FICA
d. / United States Congress
22. Employees are paid by which method
a. / Direct Depositb. / Payroll Card
c. / Paper Check
d. / All of the above
23. Which of the following best describes the benefits of having insurance?
a. / The policyholder may become better off financially if an accident occurs.b. / Insurance combined with emergency savings provides a sense of financial security and peace of mind
c. / The policyholder no longer has to worry about paying for financial losses resulting from an accident because all risk of financial loss is transferred to the insurance company.
d. / It is required by law to purchase all types of insurance, so the benefits do not matter.
24. Eric has chosen Amanda to be the beneficiary of his life insurance policy. What does this mean for Amanda?
a. / Amanda must pay the insurance premiums to keep the policy in effect.b. / Amanda will receive the amount of the life insurance if Eric dies.
c. / Amanda will receive a commission for selling Eric his life insurance policy.
d. / Amanda is required to serve as the executor of Eric’s estate.
25. What is the difference between property and liability insurance?
a. / Property insurance pays for loss to the insured person whereas liability insurance pays for loss to other people.b. / Property insurance pays for loss to other people whereas liability insurance pays for loss to the insured person.
c. / The difference between property and liability insurance depends on the specific insurance policy purchased.
d. / The difference between property and liability insurance depends on whether automobile, homeowners, or renters insurance is purchased.
26. Jason has two young children that he financially supports on his own. Jason is worried that he will become injured and unable work. If this happened he would lose his income and therefore, his ability to support his children. What type of insurance would you recommend Jason purchase to cover this risk?
a. / Renter’s insuranceb. / Life insurance
c. / Health Insurance
d. / Disability Insurance
27. Joanna breaks her arm and goes to the hospital to treat the injury. Which type of insurance would help cover the costs of her medical bills?
a. / Collision insuranceb. / Life insurance
c. / Health Insurance
d. / Disability Insurance
28. If a person drives an automobile, they are required by law to have some level of automobile liability insurance. In which situation would this type of policy protect the policyholder?
a. / James hits a deer while driving to work on a foggy morning, killing the deer and causing $2000 in damage to his car.b. / James backed into a vehicle in the grocery store parking lot and caused $3000 in damages to the other vehicle.
c. / An uninsured driver ran a stoplight, hit James’ car, and caused $2000 in damages to James car and $300 in damage to his own vehicle.
d. / James’ car was in the parking lot at work during a severe hailstorm where $2000 damage was done to his vehicle.
USE THE FOLLOWING SCENARIO FOR QUESTIONS 29 AND 30.
Bob is working for a bank. He earns $8.00 an hour, works 40 hours a week, and gets paid every 2 weeks. Every pay period he pays $63.08 into federal withholdings, $33.21 into state withholdings, and $42.05 into FICA,
29. What is Bob’s gross pay on his paycheck?
a. / $501.66b. / $320.00
c. / $576.92
d. / $640.00
30. What is Bob’s net pay on his paycheck?
a. / $501.66b. / $363.32
c. / $576.92
d. / $640.00
DIRECTIONS: MATCH THE FOLLOWING TERM ON THE RIGHT WITH ITS DEFINITION ON THE LEFT. EACH QUESTION IS WORTH 1 POINT.
G____ / 32. Used to determine the amount of federal taxes withheld from a paycheck. / B. Social Security
J____ / 33. The amount of money subtracted or deducted from the gross pay earned in a pay period. / C. Medicare
B____ / 34. Nation’s Retirement Program / D. Payroll Card
D____ / 35. Payment method that electronically carries the balance of the employee’s net pay / E. Pay Period
C____ / 36. The Nation’s Health Care Policy for the elderly and disabled / F. Net Pay
A____ / 37. Totals all of the deductions that have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub. / G. Allowances
F____ / 38. The amount of money left after all deductions have been taken from the gross pay earned in a pay period. / H. Medical
H____ / 39. The amount taken from the employee’s paycheck for medical benefits. / I. Printed Paycheck
K____ / 40. The amount required by law for employers to withhold from earned wages to pay taxes
. / J. Deductions
I____ / 41. Payment method that is least secure. / K. Federal Withholding Tax
DIRECTIONS: MATCH THE FOLLOWING TERM ON THE RIGHT WITH ITS DEFINITION ON THE LEFT. EACH QUESTION IS WORTH 1 POINT.
F____ / 43. Protection for a dwelling against perils like fire and lightning.
/ B. Policyholder
A____ / 44. Accident, theft, damage, destroyed, unexpected. / C. Life
B____ / 45. Consumer who purchased the policy. / D. Deductible
I____ / 46. Fee paid to the insurer to be covered under specified terms.
/ E. Policy
C____ / 47. Unnecessary insurance for high school participants with no financial dependents / F. Homeowner’s
E____ / 48. Contract between the individual and an insurer specifying the terms of the insurance.
/ G. Medical
G____ / 49. Many high school participants are covered under their parents for this type of insurance.
/ H. Beneficiary
H____ / 50. Title of people receiving money from a life insurance policy after the insured person dies. / I. Premium
DIRECTIONS: ANSWER THE FOLLOWING QUESTIONS BY WRITING A SHORT ANSWER.
51. EXPLAIN the difference between homeowner’s insurance and renters insurance AND identify when each would be used. (4 points)
52. Is insurance important? Support your answer with at least TWO reasons. (2 points)
53. Approximately what percentage of a person’s paycheck s deducted? (1 points)
54. Mary earns $60,000 per year and is paid every two weeks. How much is her gross pay every pay period. Her federal tax is $128.64, state tax is $91.23, FICA is $78.77. She does not have medical benefits but does save $100 for a retirement plan. (3 points)
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