An insurance policy provision that specifies how a property loss will be settled if more
than one property insurance policy covers the loss is the
A) insuring agreement provision.
B) loss settlement provision.
C) other insurance provision.
D) coinsurance provision.
Brad owns a cash value life insurance policy. Last year, the cash value increased by
$300. Brad received $100 in policyowner dividends on the policy last year. Brad was
the beneficiary named in his grandmother’s $50,000 life insurance policy. When she
died this past year, Brad received $50,000. How much taxable income relating to life
insurance must Brad report for federal income tax purposes?
A) $0
B) $100
C) $400
D) $50,400
Which of the following statements regarding individual retirement accounts (IRAs) is
(are) true?
I. If an individual’s only income during the year is from investments, he or she cannot
make an IRA contribution.
II. The funds in the IRA can be used to purchase life insurance on the owner.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following losses would be covered under the personal liability coverage
(Coverage E) of an unendorsed Homeowners 3 policy?
A) liability arising out of the manufacture and sale of illegal narcotics
B) liability arising out of damage to a neighbor’s property that occurred over time
C) liability arising out of a business operated in the home.
D) liability arising out of bodily injury to an insured
National Bank believed it had been properly authorized to transfer $250,000 to the
off-shore account of one of its corporate customers. The authorization was fraudulent,
however, and the transferred funds were stolen. Under which commercial crime
coverage insuring agreement would such a loss be covered?
A) Money Orders and Counterfeit Currency
B) Forgery or Alteration
C) Outside the Premises
D) Funds Transfer Fraud
A peril is
A) a moral hazard.
B) the cause of a loss.
C) a condition which increases the chance of a loss.
D) the probability that a loss will occur.
A large property and liability insurance company merged with a bank and then acquired
a stock brokerage company. This type of merger and acquisition activity is categorized
as
A) insurance company consolidation.
B) cross-industry consolidation.
C) financial risk management.
D) insurance brokerage consolidation.
Shareholders and employees harmed by the negligent acts and deceptive statements of
company leaders may file lawsuits against the company leaders. Company leaders are
covered for such claims under which type of insurance?
A) employment practices liability insurance
B) employee benefit liability insurance
C) directors and officers liability insurance
D) general liability insurance
Which of the following statements about torts is (are) true?
I. The person who is injured or harmed by a tort is called a plaintiff or claimant.
II. The punishment for committing a tort is damages in the form of money.
A) I only
B) II only
C) both I and II
D) neither I nor II
Cathy just started a job with XYZ Manufacturing Company. She attended an orientation
and was given a packet providing information about the various employee benefits
XYZ offers. One item in the packet was a booklet and application form from an auto
insurer. The insurer offers lower premiums to XYZ employees. The insurer’s plan for
selling individually-underwritten auto insurance to employees of XYZ Manufacturing
Company is called
A) direct response.
B) mass merchandising.
C) personal selling.
D) multiple marketing.
A group of farmers agreed that if any farmer suffered a property loss, the loss would be
spread over the entire group. In this way, each farmer is responsible for the average loss
of the group rather than the actual loss that the farmer sustained. Which characteristic of
insurance is embodied in this agreement?
A) pooling of losses
B) fortuitous losses
C) risk avoidance
D) indemnification
An insurance company incorporated in another state has been licensed to operate in
your state. In your state, the insurer would be considered a(n)
A) nonadmitted insurer.
B) foreign insurer.
C) alien insurer.
D) reciprocal insurer.
One of the purposes that deductible are used in insurance policies is to
A) eliminate coverage for small claims.
B) place restrictions or limits on the insurer’s promise to perform.
C) provide broader coverage by increasing the number of perils covered.
D) exclude perils that are not insurable.
ABC Life Insurance Company is offering a new product. The product is a two-year
term insurance policy funded by a single premium at the start of the first year. Death
claims are paid at the end of the year in which death occurs. A portion of the
appropriate mortality table is shown below. The first number is age, the second is the
number alive at the start of the year, and the last number is the number dying during the
year.
Using a 5.5 percent interest rate, the present value of $1 one year from today is .9479,
and the present value of $1 two years from today is .8985. Assuming a 5.5 percent
interest rate, what is the net single premium for a $1,000 two-year term policy issued at
age 39?
A) $1.49
B) $2.94
C) $5.67
D) $12.83