Which of the following pieces of information is needed to calculate a person’s human
life value?
A) the marital status of the person.
B) the person’s estimated annual Social Security benefits after retirement.
C) the person’s cost of self-maintenance.
D) current outstanding debts, including mortgage debt.
A fire destroyed the home next door to Brad’s home. The fire department chief was
concerned that the damaged home would collapse on to Brad’s home, so he ordered
Brad to evacuate his home. Which of the following statements is true concerning the
cost of Brad’s hotel room while he is complying with the fire chief’s order?
A) The cost of the hotel room is not covered, as Brad’s home was not directly damaged.
B) The cost of the hotel room is covered under the “fair rental value” coverage of Part
D.
C) The cost of the hotel room is covered under the “prohibited use” coverage of Part D.
D) The cost of the hotel room is covered under the dwelling coverage of Part A.
Which of the following is an advantage of longevity insurance?
A) Death benefits are paid to a beneficiary if death occurs during the deferral period.
B) The interest rate credited to the cash value is higher than what is earned on
traditional life insurance.
C) Monthly benefits begin at an advanced age when other assets are likely to have been
depleted.
D) The policyowner has unrestricted access to the funds during the deferral period
through loans and cash withdrawals.
R.I.P. Company manufactures herbicide and pesticide. The company had difficulty
finding affordable liability insurance. R.I.P. established its own insurance company
based in Bermuda for the purpose of insuring R.I.P.’s loss exposures. The company that
R.I.P. formed is called a
A) captive insurer.
B) reciprocal insurer.
C) fraternal insurer.
D) holding company.
Which of the following statements is (are) true with regard to the use of technology in
risk management programs?
I. Risk management Intranets are networks intended for an internal audience.
II. Risk management information systems can be used to store and track workers
compensation claims data.
A) I only
B) II only
C) both I and II
D) neither I nor II
Under the Homeowners 3 policy, all of the following are options of the insurer for
settling claims EXCEPT
A) paying the claim in cash.
B) replacing the property.
C) repairing the property.
D) paying the claim with insurance company stock.
From the viewpoint of the insurer, all of the following are characteristics of an ideally
insurable risk EXCEPT
A) The loss must be accidental.
B) The loss should be catastrophic.
C) The premium must be economically feasible.
D) There must be a large number of exposure units.
Which of the following is (are) included in the common declarations page of a
commercial package policy?
I. A description of the insured property
II. A listing of the causes-of-loss that are covered by the policy
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about types of property covered under the Personal
Articles Floater is true?
A) Golfer’s equipment is covered only in the United States.
B) Furs are covered on a blanket basis without the necessity to schedule individual
items.
C) A higher premium must be paid to insure musical instruments if they are played for
pay.
D) Coverage for silverware and goldware is not available under the Personal Articles
Floater.
State X’s premium tax rate is 2 percent. State Y’s premium tax rate is 3 percent. State X
insurers are required to pay the 3 percent rate on business written in State Y. State X
requires insurers from State Y to pay a 3 percent premium tax on business written in
State X, even though the premium tax rate is only 2 percent in State X. This practice is
known as a
A) tax tariff.
B) guaranty fund assessment.
C) risk-based capital requirement.
D) retaliatory tax law.
All of the following statements about the Medicare prescription drug benefit are true
EXCEPT
A) Beneficiaries are required to pay a monthly premium for the benefit.
B) The plan provides protection against catastrophic prescription drug expenditures.
C) Coverage is limited to when a beneficiary is hospitalized or a resident of rest home.
D) The plan has a coverage gap before a beneficiary has coverage for catastrophic
costs.
Janet hit a wall causing a large dent in the fender of her car. She was busy at work and
delayed reporting the damage to her insurer for 9 months. The insurer denied the claim,
stating, “Although such a loss is usually covered, you are required under the terms of
the contract to provide prompt notification in case of loss.” The prompt notification
requirement is an example of a(n)
A) declaration.
B) definition.
C) insuring agreement.
D) condition.
Which of the following types of families is likely to have the least need for a large
amount of life insurance?
A) a blended family
B) a traditional family
C) a single person family
D) a sandwiched family
All of the following are ISO personal umbrella liability policy exclusions EXCEPT
A) liability arising out of uncompensated board service for a nonprofit organization.
B) liability arising out of expected or intentional injury.
C) liability arising out of business operations.
D) liability arising out of operation of watercraft not covered by an underlying policy.
All of the following are categories of torts EXCEPT
A) intentional torts.
B) breach of contract.
C) strict liability.
D) negligence.
The extra expense incurred by a business to stay in operation following a fire is an
example of a(n)
A) fundamental risk.
B) speculative risk.
C) direct loss.
D) indirect loss.