Which of the following $100,000 whole life insurance policies, issued by the same
company to a man age 32, would require the highest first-year premium?
A) continuous premium (ordinary) life
B) whole life paid-up at 65
C) 10-payment whole life
D) 20-payment whole life
Which of the following are legal obligations of a property owner with respect to an
invitee?
I. The property owner must warn an invitee of any unsafe conditions.
II. The property owner must inspect the premises and eliminate any dangerous
conditions revealed by the inspection.
A) I only
B) II only
C) both I and II
D) neither I nor II
In addition to most persons over age 65, which of the following persons is (are) eligible
for Medicare benefits?
I. Persons under age 65 who have been entitled to Social Security disability benefits for
at least 24 months
II. Persons under 65 who need long-term kidney dialysis treatment or a kidney
transplant
A) I only
B) II only
C) both I and II
D) neither I nor II
Beverly lives in a sparsely populated area in northern Idaho. Some insurance companies
marketing coverage in northern Idaho cannot afford to have full-time adjustors there.
Several insurers hire Beverly to adjust claims for their insureds. Beverly charges the
insurers a fee for each claim that she settles. Beverly is a(n)
A) public adjustor.
B) adjustment bureau.
C) independent adjustor.
D) company adjustor.
Which of the following statements about subrogation is true?
A) Subrogation eliminates adverse selection.
B) Subrogation helps to hold down the cost of insurance.
C) Subrogation results in violation of the principle of indemnity.
D) Subrogation permits a party who caused a loss to avoid responsibility for the loss.
Fundamental purposes of the principle of indemnity include which of the following?
I. To reduce physical hazards
II. To prevent the insured from profiting from insurance
A) I only
B) II only
C) both I and II
D) neither I nor II
All of the following statements about cost controls in dental insurance plans are true
EXCEPT
A) The coinsurance percentage used may vary by type of dental service.
B) Cosmetic dental work is usually excluded.
C) The limit on benefits may be expressed as an annual limit or as a lifetime limit for
certain types of dental services.
D) To eliminate small claims, there is no coverage for routine oral examinations,
X-rays, or cleaning teeth.
Metro City has six different zip codes. XYZ Insurance Company markets coverages in
Metro City. Any applicant who lists one particular zip code is automatically quoted a
premium that is twenty percent more than the average premium for applicants from the
other five zip codes, even if the loss exposure is identical. Which regulatory objective is
not being met given XYZ’s premium structure?
A) Rates must be adequate.
B) Rates must not unfairly discriminate.
C) Rates must be responsive.
D) Rate must not be excessive.
Which of the following statements is true regarding insurance market conditions and
underwriting results?
A) A combined ratio greater than one (or 100 percent) indicates profitable underwriting.
B) In a ‘soft” insurance market, more retention is used than in a “hard” insurance
market.
C) Insurance rates are high and underwriting standards are tight when the insurance
market is “hard.”
D) Property and liability insurance premiums and underwriting standards do not
fluctuate over time.
JKL Insurance Company reported the following information on its accounting
statements last year:
What was JKL’s combined ratio last year?
A) 100.0
B) 103.3
C) 105.0
D) 108.3
Persons insured under Section I of the Homeowners 3 policy include which of the
following?
I. A spouse of the named insured if living in the same household
II. The named insured’s children who are under age 24 and who are full-time college
students
A) I only
B) II only
C) both I and II
D) neither I nor II