All of the following statements about conditions under a homeowners policy are true
EXCEPT
A) If an insurer broadens coverage without an additional premium during the policy
period, the broadened coverage applies immediately to the present policy.
B) A waiver or change in any policy provision must be approved in writing by the
insurer to be valid.
C) The insurer must give written consent for an assignment of the policy to be valid.
D) If the named insured dies, coverage automatically ceases with respect to any
property of the deceased.
Which of the following statements about the characteristics of social insurance
programs is true?
A) They are designed to provide a floor of income with respect to the risks that are
covered.
B) The method of determining benefits is determined by insurance contractual
provisions.
C) Participants are required to satisfy a means test to receive benefits.
D) With few exceptions, participation in social insurance programs is voluntary.
The multi-car discount is based on the assumption that
A) two cars owned by the same person will not be driven as frequently as one car.
B) multiple vehicle owners are safer drivers.
C) owners of more than one vehicle are more likely to be financially responsible.
D) lower liability limits are needed if there are multiple autos insured.
Which of the following statements about the building and personal property coverage
form is (are) true?
I. A limited amount of coverage is provided for pollutant cleanup and removal at the
described premises if the release or discharge of the pollutant results from a covered
cause of loss.
II. Fire department service charges are specifically excluded because they are a normal
cost of doing business.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following is (are) often consequences of long-term disability?
I. Continuing medical expenses
II. Loss or reduction of employee benefits
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about retirement benefits under pension plans is
true?
A) Under a flat percentage of annual earnings defined benefit formula, each employee
receives the same dollar benefit.
B) A benefit using final pay is usually based on an employee’s earnings during the last
month of plan participation.
C) A unit-benefit formula considers both earnings and years of service.
D) Past service benefits are the result of bonuses and overtime pay during the period an
employee participated in the plan.
Which of the following is an example of a noninsurance risk transfer?
A) not engaging in dangerous activities
B) entering into a hold-harmless agreement
C) installing smoke detectors in your home
D) using nonflammable building material when constructing a house
Which of the following statements about a warranty in an insurance contract is (are)
true?
I. It is part of the insurance contract.
II. Statements made by an insurance applicant are considered warranties rather than
representations.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about the problems and issues of unemployment
insurance programs is (are) true?
I. Many state programs are inadequately financed.
II. Only a small portion of the total unemployed receive benefits at any time.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following persons is (are) insured under the uninsured motorists coverage
of the PAP?
I. A pedestrian struck by a covered auto if he or she has no insurance to pay medical
expenses
II. The spouse of a named insured who is killed by an uninsured motorist
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about joint underwriting associations for insuring
high-risk drivers is (are) true?
I. Underwriting losses are proportionately shared by all auto insurers based on
premiums written in the state.
II. Each company participating in a joint underwriting association sets it own rates.
A) I only
B) II only
C) both I and II
D) neither I nor II
A financial institution that provides for the accumulation or administration of the funds
that will be used to pay pension benefits is called a
A) trust fund.
B) mutual fund.
C) funding instrument.
D) funding agency.
Cathy’s car hit a patch of ice on the road. The car skidded off the road and hit a tree.
The presence of ice on the road is best described as a(n)
A) peril.
B) subjective risk.
C) physical hazard.
D) indirect loss.
Which of the following statements about Roth 401(k) plans is true?
I. Contributions to a Roth 401(k) plan are made with before-tax dollars.
II. Qualified distributions from a Roth 401(k) are received income-tax free.
A) I only
B) II only
C) both I and II
D) neither I nor II
The major reasons for insurer insolvency include which of the following?
I. Inadequate pricing and loss reserves
II. Rapid growth and inadequate surplus
A) I only
B) II only
C) both I and II
D) neither I nor II
In addition to marketing life insurance, life insurers typically sell which of the
following products?
I. Retirement annuities
II. Disability income insurance
A) I only
B) II only
C) both I and II
D) neither I nor II