Consolidation in the insurance industry is a continuing trend. One area where mergers
and acquisitions frequently occur is between marketing intermediaries who represent
insurance purchasers. These intermediaries are called
A) insurance adjusters.
B) insurance agents.
C) insurance underwriters.
D) insurance brokers.
Vesting refers to
A) the employer’s right to terminate contributions if a pension plan is adequately
funded.
B) the employer’s right to recapture employee contributions to a pension plan if
employment terminates prior to retirement.
C) the employee’s right to the employer’s contributions or benefits attributable to the
contributions if employment terminates prior to retirement.
D) the employer’s right to discriminate against non-highly compensated employees
when determining pension benefit levels.
A situation or circumstance in which a loss is possible, regardless of whether a loss
occurs, is called a
A) deductible.
B) loss exposure.
C) loss avoidance.
D) peril.
Lu would like to save money on her homeowners premium. All of the following steps
will help her to reduce her homeowners premium EXCEPT
A) raising the deductible in the homeowners policy to a higher amount.
B) shopping around a homeowners policy.
C) installing burglar alarms, smoke detectors, and dead-bolt locks.
D) insuring the value of the land beneath the house.
Dense fog that increases the chance of an automobile accident is an example of
A) a speculative risk.
B) a peril.
C) a physical hazard.
D) a moral hazard.
Which of the following statements is (are) true regarding taxation of life insurance?
I. Life insurance proceeds paid in a lump-sum to a designated beneficiary are received
free of federal income taxes.
II. The policyowner must pay taxes annually on the amount by which the cash value of
his or her life insurance policy has increased.
A) I only
B) II only
C) both I and II
D) neither I nor II
Discount Department Stores is a national retail chain. The company had one large,
central warehouse. At the suggestion of the risk manager, the company decided to build
four smaller regional warehouses so that a loss at the central warehouse would not be a
catastrophic blow to the company’s distribution system. Splitting the inventory between
four regional warehouses illustrates which risk management technique?
A) loss prevention
B) risk transfer
C) loss reduction
D) risk avoidance
Many group insurers contact employers and arrange for their individual insurance
producers to meet with interested employees at the workplace to conduct sales
interviews. This distribution method is called a
A) mixed marketing program.
B) worksite marketing program.
C) cafeteria plan.
D) mass merchandising program.
Which of the following statements is (are) true regarding the Roth IRA?
I. Roth IRA contributions are tax deductible.
II. Roth IRA investment income accumulates income-tax free.
A) I only
B) II only
C) both I and II
D) neither I nor II
All of the following changes would reduce the long-range deficit for the Social Security
program EXCEPT
A) increase the OASDI taxable wage base.
B) delay scheduled increases in the full retirement age.
C) make all OASDI benefits fully taxable.
D) use general revenues of the federal government to help pay benefits.