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A managed care plan under which members can receive medical care from non-network
providers at higher out-of-pocket costs is an example of a(n)
A) group practice plan.
B) individual practice plan.
C) exclusive provider organization.
D) point-of-service plan.
The primary purpose of coinsurance in property insurance is to
A) reduce moral hazard.
B) achieve equity in rating.
C) minimize problems in settling claims.
D) eliminate small losses.
The purpose of a coordination-of-benefits provision in group health insurance plans is
to
A) determine which plan pays first if more than one plan covers a loss.
B) determine which health care provider an insured may use for his or her care.
C) determine if the calendar-year deductible has been satisfied by the insured.
D) determine if the employee is eligible for coverage under the group health plan.
Which of the following is a characteristic of a health maintenance organization (HMO)?
A) unlimited choice of health-care providers
B) no premiums until care is provided
C) narrow, limited, medical services provided
D) great emphasis on cost containment
Malcolm was involved in an auto accident. He was judged to be 20 percent at fault in
the accident, and the other party was judged to be 80 percent at fault. Malcolm's actual
damages were $40,000. Under a pure comparative negligence rule, how much will
Malcolm receive for his injuries?
A) $8,000
B) $24,000
C) $32,000
D) $40,000
The general rule that ambiguity in insurance contracts is construed against the insurer is
reinforced by an important legal principle. This principle states the insured is entitled to
coverage under a policy that he or she would assume the policy would provide, and
exclusions must be conspicuous, plain, and clear. This principle is known as
A) the principle of utmost good faith.
B) the principle of reasonable expectations .
C) the principle of subrogation.
D) the principle of indemnity.
Which of the following is a cost/expense that an estate clearance fund is designed to
pay?
A) burial expenses
B) retiring the mortgage
C) education costs
D) income to the widow(er) during the readjustment period
Trisha was injured when the delivery truck for a local furniture store struck her. The
delivery driver claimed the brakes of the delivery truck failed, causing the accident.
Trisha filed suit, and in her lawsuit named the delivery driver, the furniture store, the
service station responsible for vehicle maintenance, and the manufacturer of the
vehicle. Even though the manufacturer of the vehicle may be only 1 percent responsible
for the accident, it may be required to pay a large percentage of the damages under the
A) collateral source rule.
B) assumption of risk rule.
C) joint and several liability rule.
D) last clear chance rule.
Which of the following statements is (are) true regarding how the Homeowners 3 policy
handles the peril of collapse?
I. Collapse is specifically excluded, and there are no exceptions to the exclusion.
II. Collapse that is caused by a Coverage C peril is covered.
A) I only
B) II only
C) both I and II
D) neither I nor II
Under one type of retirement plan for small businesses, the employer contributes to an
IRA established for each eligible employee. Under this type of plan, the contribution
limits are significantly higher than they are for traditional IRAs and Roth IRAs. This
type of plan, which requires little paperwork, is called a
A) simplified employee pension (SEP) plan.
B) defined benefit plan.
C) Keogh plan.
D) 403(b) plan.
Under a unit-benefit formula, benefits are a function of both
A) earnings and years of service.
B) age and earnings.
C) age and gender.
D) years of service and position within a firm.
There are a number of implied warranties in ocean marine insurance. One implied
warranty is that the vessel is properly constructed and maintained, and that it properly
equipped for the voyage to be undertaken. This implied warranty is the warranty of
A) seaworthiness.
B) barratry.
C) no deviation from planned course.
D) legal purpose.
