Which of the following statements about endowment insurance policies is (are) true?
I. The face amount is paid if the insured dies during the policy period or at the end of
the policy period if the insured is still alive.
II. The use of endowment insurance has increased in recent years because of its
favorable tax treatment.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about workers compensation insurance is (are) true?
I. Under the workers compensation part of the policy, the insurer agrees to pay the
benefits required by the workers compensation law of any state listed in the policy
declarations.
II. The employers liability part of the policy provides workers compensation benefits
when employees are working in states other than those listed in the policy declarations.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about mutual insurers is true?
A) They are legally organized as partnerships.
B) They have a board of directors which is selected by state insurance departments.
C) They are owned by their stockholders.
D) They may pay dividends to their policyholders.
The purpose of other-insurance provisions is to
A) eliminate the need for deductibles.
B) penalize those insureds who carry inadequate amounts of insurance.
C) specify who will pay losses if the insurer is bankrupt.
D) preserve the principle of indemnity.
All of the following statements about individual disability income policies are true
EXCEPT
A) Premiums are often waived while a person is disabled but must be resumed if the
insured recovers.
B) At the time of purchase, the insured can choose the length of the benefit period from
among several available options.
C) In order to encourage rehabilitation, benefits may be continued during periods of
vocational training.
D) Most disability income insurance policies contain an elimination period of 10 or
fewer days.
Under the terms of Jenny’s auto insurance policy, she must pay the first $500 of any
physical damage loss to her vehicle before her insurer will pay anything. What type of
deductible is included in Jenny’s auto insurance policy?
A) calendar-year deductible
B) waiting period
C) straight deductible
D) aggregate deductible
Delta Insurance Company has a surplus-share treaty with Eversafe Reinsurance. Delta
has a retention limit of $200,000, and nine lines of insurance are ceded to Eversafe.
How much will Eversafe pay if a $1,600,000 building insured by Delta suffers an
$800,000 loss?
A) $600,000
B) $700,000
C) $720,000
D) $800,000
A method of characterizing the relationship between two or more variables and then
using the characterization to make a prediction is called
A) loss analysis.
B) time value of money analysis.
C) regression analysis.
D) capital budgeting analysis.
What is the intent of the family purpose doctrine?
A) to impose liability on children for the care of elderly parents
B) to impose liability on the owner of an automobile for the negligence of immediate
family members operating the automobile
C) to impose liability on a parent for any negligence caused by a child
D) to impose strict liability on the owner of a wild animal for any injuries caused by the
animal
All of the following losses are excluded from coverage under Section II of an
unendorsed Homeowners 3 policy EXCEPT
A) Phyllis, a medical technician, misread a lab test and the patient is suing her.
B) While using his canoe, Bert hit another canoe. The other canoe sank. Bert is being
sued.
C) Violet runs a for-profit daycare service in her home. The parents of a child injured
while in Violet’s care are suing Violet.
D) The homeowner’s son was injured when he fell off a swing in the homeowner’s yard.
Which of the following statements is (are) true concerning the joint and survivor
annuity settlement option?
I. Under this option, payments begin after the first annuitant dies.
II. This settlement option is often selected by married couples.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about the insurance industry as a source of
investment funds is (are) true?
I. These funds result in a lower cost of capital than would exist in the absence of
insurance.
II. These funds tend to promote economic growth and full employment.
A) I only
B) II only
C) both I and II
D) neither I nor II
Angie was injured when her car was struck by a driver who ran a red light. The other
driver carried the minimum liability coverage necessary to be considered financially
responsible. Angie’s injuries were $15,000 above the minimum bodily injury limit.
There is a coverage that can be added to the PAP that applies when a negligent driver
carries the minimum liability insurance required by the state, but is less than the
insured’s actual damages for bodily injury. This coverage is called
A) medical payments coverage.
B) underinsured motorists coverage.
C) bodily injury liability coverage.
D) uninsured motorists coverage.
Which of the following is an expense for a life insurance company?
A) loss reserves
B) death benefits paid to a beneficiary
C) unrealized capital gains
D) realized capital gains