All of the following are considered to be uninsured vehicles for purposes of the
uninsured motorists coverage of the PAP EXCEPT
A) a vehicle owned by an individual who is insured, but for less than the amount
required by the state’s financial responsibility law.
B) a hit-and-run vehicle, the ownership of which cannot be determined.
C) a vehicle owned by an individual who purchased enough liability insurance to satisfy
the state’s financial responsibility law.
D) a vehicle insured by a company which becomes insolvent before a claim can be
paid.
Deductibles are not used in which of the following type of insurance?
A) life insurance
B) health insurance
C) property insurance
D) disability income insurance
One method of ensuring the solvency of insurers is a periodic review, every three to five
years, of insurers that operate on a multistate basis. This review is coordinated by the
NAIC. This review is called a(n)
A) annual report.
B) early warning system.
C) field examination.
D) inspection report.
Which of the following statements regarding the accidental death benefit rider (also
known as double indemnity) is true?
A) Adding the accidental death benefit rider doubles the premium for the policy.
B) Financial planners agree that adding the accidental death benefit rider is a wise
purchase.
C) The economic value of a human life is doubled or tripled if death is caused by an
accident, justifying the purchase of the rider.
D) The death benefit is doubled only if an accidental injury is the direct cause of death
and death occurs prior to a specified age.
The appraisal provision in the Personal Auto Policy is used to determine the
A) value of a loss payable under the property damage liability.
B) amount paid for a physical damage loss to the insured’s auto if the insured and
insurer disagree.
C) amount of auto insurance that should be purchased for an older/antique car.
D) value of the loss payable under the medical payments coverage.
All of the following statements about traditional and Roth IRAs are true EXCEPT
A) Traditional IRA contributions may be fully, partially, or not income tax deductible.
B) Qualified distributions from Roth IRAs are received income tax free.
C) Contributions to Roth IRAs are made with after-tax dollars.
D) Traditional IRAs are exempt from the penalty tax on premature distributions.
Lynn works for a state university. In addition to her regular pension plan, Lynn
established another retirement savings plan. She elected to have $5,000 of her salary
withheld and contributed to a tax-sheltered annuity with an insurer. The type of plan
that Lynn established is called a
A) SIMPLE plan.
B) 403(b) plan.
C) defined benefit plan.
D) Keogh plan.
The bar at the local franchise of a national chain continued to serve a drunk customer.
The customer left the bar and tried to drive home. The drunk driver hit and killed three
people who were riding bicycles. The legal representatives of those who were killed
filed a multi-million dollar lawsuit against the national chain. As jury awards in the city
where the incident occurred tend to be high, insurers marketing liquor liability
insurance refused to issue new coverage until the case was resolved. Because no
admitted insurers were willing to offer the coverage, liquor liability in this case is
considered a(n)
A) residual line.
B) mandatory coverage.
C) orphan policy.
D) surplus line.
Which of the following statements is (are) true with respect to annuities?
I. Annuities are the opposite of life insurance.
II. The fundamental purpose of annuities is to replace lost income in case of premature
death.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about a priori probabilities is correct?
A) They are subjective probabilities based on ambiguity in the way probability is
perceived.
B) They are subjective probabilities that may vary among individuals because of factors
such as age, gender, education, and the use of alcohol.
C) They are objective probabilities that can be determined by deductive reasoning.
D) They are objective probabilities that can be determined by subjective reasoning.
In which of the following did the Court decide that insurance was interstate commerce
when conducted across state lines, and therefore was subject to federal regulation?
A) Paul v. Virginia
B) South-Eastern Underwriters Association case
C) McCarran-Ferguson Act
D) Financial Modernization Act
One physical damage coverage alternative under the Business Auto Policy provides
coverage for losses caused by certain named perils, such as fire, lightning, or explosion;
theft; windstorm, hail or earthquake; flood; vandalism or mischief; or the sinking,
burning, collision or derailment of any conveyance transporting the covered auto. This
physical damage coverage alternative is
A) collision coverage.
B) garage coverage.
C) comprehensive coverage.
D) specified causes-of-loss coverage.