Which distinct legal characteristic of insurance contracts states that only the insurer’s
promise to perform is legally enforceable?
A) contracts of adhesion
B) unilateral contracts
C) aleatory contracts
D) personal contracts
Which of the following statements about the personal property coverage (Coverage C)
of the Homeowners 3 policy is (are) true?
I. The coverage applies only in the United States and Canada.
II. The full amount of coverage applies only if the property is permanently located at
any residence of the insured.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements regarding Section II coverage under the
Homeowners 3 policy is true?
A) Medical payments to others are covered regardless of whether the insured is legally
liable.
B) Legal defense costs incurred by the insurer to defend the insured reduce the
per-occurrence limit of liability available.
C) The insurer is not required to defend the insured against a groundless, false, or
fraudulent lawsuit.
D) Any amount paid under medical payments coverage reduces the personal liability
limit available for the same claim.
Which of the following statements about the full retirement age under the Social
Security program is true?
A) The current retirement age for full benefits is age 62.
B) Beginning in the year 2020, the retirement age will be gradually increased to age 72.
C) Early retirement with reduced benefits is allowed as early as age 55.
D) Delayed retirement beyond the age for full benefits increases the amount of the
monthly benefit.
Which of the following statements about second-to-die life insurance is (are) true?
I. The insurance is a form of endowment coverage.
II. The premium is lower than the combined cost of purchasing a life insurance policy
on each insured.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements is (are) true concerning private insurance?
I. Social insurance programs are always written by private insurers.
II. Individuals and businesses purchase private insurance.
A) I only
B) II only
C) both I and II
D) neither I nor II
Francis opened a store. She knows that customers who come to the store may be injured
on the premises and hold her responsible for their injuries. Under common law,
business customers in the store Francis opened are considered
A) aliens.
B) licensees.
C) trespassers.
D) invitees.
Jose and Maria would like “open-perils” coverage on their home and their personal
property. Which unendorsed homeowners form provides this coverage?
A) Homeowners 2
B) Homeowners 3
C) Homeowners 4
D) Homeowners 5
Which of the following statements about savings bank life insurance is true?
A) The maximum amount that a depositor can purchase is $50,000.
B) The maximum amount of insurance that a depositor can purchase is limited to the
amount of money on deposit in his or her savings account with the savings bank.
C) The objective of savings bank life insurance is to provide protection to the bank in
case a borrower dies before a loan is repaid.
D) The objective of savings bank life insurance is to provide low-cost insurance to
consumers by holding down expenses.
Bruce believes a local manufacturer is responsible for contaminating some land he
owns. He filed suit against the company. Rather than have the case go to court, the
manufacturing company’s legal team suggested mediation or arbitration to settle the
case. Methods that are employed to resolve legal disputes without litigation, such as
mediation, are called
A) collateral source rules.
B) alternative dispute resolution techniques.
C) joint and several liability techniques.
D) comparative negligence rules.
Which of the following statements about the Homeowners 6 (unit-owners form) policy
is true?
A) It includes personal liability coverage.
B) It covers personal property on an open-perils basis.
C) It covers the dwelling on an open-perils basis.
D) It is designed for tenants who rent an apartment or a home.
Brad funded a life annuity through installment payments. At age 60, he decided to elect
an annuity settlement option and to begin to receive payments. Which of the following
life income options will provide Brad with the highest monthly income?
A) life annuity (no refund)
B) life income with payments guaranteed for 5 years
C) life income with payments guaranteed for 10 years
D) installment refund annuity
Which of the following statements about the eligibility requirements for group
insurance is true?
A) Most plans cover both full-time and part-time employees.
B) An employee must be actively at work on the day the employee’s group insurance
becomes effective.
C) An employee who signs-up for insurance during an eligibility period must furnish
evidence of insurability.
D) One purpose of a probationary period is to determine whether the employee is
healthy enough to be covered under the group health insurance plan.
All of the following are historical reasons for the increase in health care expenditures in
the U.S. EXCEPT
A) cost insulation because of third-party payers.
B) employment-based health insurance.
C) universal health insurance coverage.
D) technological advances in health care.
Robert purchased an unendorsed Homeowners 3 policy. He is concerned that if his
personal property is destroyed, the insurer will take depreciation into consideration
when determining the loss settlement and will pay him less than the amount needed to
purchase new property. Which endorsement can Robert add to his Homeowners 3
policy to address this concern?
A) inflation guard endorsement
B) personal injury endorsement
C) personal property replacement cost endorsement
D) earthquake endorsement
Objective risk is defined as
A) the probability of loss.
B) the relative variation of actual loss from expected loss.
C) uncertainty based on a person’s mental condition or state of mind.
D) the cause of loss.