Connors Company self-funds the medical expense benefits that it provides to its
employees. Connors Company has a contract with a commercial health insurance
company providing that the health insurance company will pay all claims in excess of
$250,000. The arrangement with the health insurance company is called
A) reinsurance.
B) managed care.
C) stop-loss insurance.
D) coinsurance.
Which of the following statements about ocean marine insurance is true?
A) The coverage is narrow and excludes perils of the sea.
B) Hull insurance includes collision liability covering the ship’s owner if the ship
collides with another ship.
C) Protection and indemnity (P&I) insurance covers the shipper of goods for cargo
losses.
D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.
David is a successful independent insurance agent. Recently, one of the life insurance
companies with whom he places business offered him a special financial arrangement.
If David meets sales targets, he will receive large bonuses. He will also be able to
recruit and train sub-agents and receive an over-riding commission based on the amount
of life insurance the sub-agents sell. Based on this description, David is a(n)
A) insurance broker.
B) personal-producing general agent.
C) direct writer.
D) multiple life exclusive agent.
Which of the following statements is (are) true regarding the quality of insurance
regulation?
I. The quality of insurance regulation is uniform from state to state.
II. All evidence suggests federal regulation of insurance would improve the quality of
regulation.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about group accidental death and dismemberment
(AD&D) insurance is (are) true?
I. The principal sum is paid if the employee dies in an accident.
II. A percentage of the principal sum is paid for certain types of dismemberments.
A) I only
B) II only
C) both I and II
D) neither I nor II
A contingent beneficiary in a life insurance policy has the right to
A) receive the policy proceeds if the primary beneficiary dies before the insured.
B) share the policy proceeds with the primary beneficiary.
C) change the beneficiary designation under specified circumstances.
D) exercise policy rights if the insured is incapacitated.
One liability on a property and liability insurance company’s balance sheet is for the
costs associated with settling and paying reserved claims. This liability is the
A) pre-paid expense reserve.
B) loss reserve.
C) unearned premium reserve.
D) loss adjustment expense reserve.
Tom and Nancy Boyle were surprised to learn that some of their valuable personal
property – a gun collection, jewelry, a mink coat, and sterling silverware – was subject
to internal limits under their homeowners policy. What separate insurance policy can
the Boyles purchase to obtain the desired coverage on this personal property?
A) personal umbrella policy
B) dwelling form
C) personal articles floater
D) title insurance
Under one method of estimating a loss reserve, the reserve is based on life expectancy,
duration of disability, and similar factors. This method of estimating loss reserves is
called the
A) judgment method.
B) tabular value method.
C) loss ratio method.
D) average value method.
Which of the following is a common investment mistake that many retirement plan
participants make?
A) not investing heavily enough in common stock issued by the employer
B) investing too heavily in common stock when close to retirement
C) participating in an employer-sponsored retirement plan to obtain matching employer
contributions
D) participating in an employer-sponsored retirement plan and contributing the
maximum amount allowed
All of the following situations are excluded from coverage under Section II of the
homeowners policy EXCEPT
A) the rental of a spare bedroom which is used by the tenant as an office.
B) the use of a rented airplane to take a vacation.
C) the ownership of a ten-unit apartment house as an investment.
D) the performance of professional services by the insured at the residence premises.
Which of the following statements about the coverage for other structures (Coverage B)
under the Homeowners 3 policy is true?
A) The coverage applies to a detached garage or tool shed on the residence premises.
B) Structures attached to the dwelling by a fence or utility line are considered to be part
of the dwelling rather than other structures.
C) Coverage applies even if the other structure is used for business purposes.
D) There is no coverage for a private garage if it is rented to a tenant of the dwelling.
All of the following statements about the requirements to reinstate a lapsed life
insurance policy are true EXCEPT
A) Evidence of insurability is required.
B) The lapse must have resulted from other than the surrender of the policy for its cash
value.
C) All overdue premiums must be paid along with interest from the premium due dates.
D) There is no time limit on when the policy may be reinstated.
Which of the following statements is (are) true with regard to the adequacy of IRA
funds during retirement?
I. To assure lifetime income, the IRA funds can be used to purchase a life annuity.
II. The duration of IRA benefit payments depends on the rate of return earned on the
invested assets after retirement and the withdrawal rate.
A) I only
B) II only
C) both I and II
D) Neither I nor II
Stan paid an insurance company $50,000 for a fixed annuity when he was 50 years old.
At age 62, Stan plans to begin to receive payments from the insurer. There are no
guarantees on the number of payments he will receive. Based on the description
provided, this annuity can be described as a(n)
A) deferred annuity.
B) life annuity with guaranteed payments.
C) immediate annuity.
D) variable annuity.
Which of the following statements is (are) true with respect to the collision damage
waiver on rented cars?
I. It is inexpensive and is provided at no charge by most rental car companies.
II. It waives the renter’s liability for bodily injury liability arising out of use of the
rented auto.
A) I only
B) II only
C) both I and II
D) neither I nor II