What is the effect of the optional agreed value provision in the building and personal
property coverage form?
A) It provides replacement cost coverage.
B) It increases insured values along with inflation.
C) It suspends the coinsurance clause.
D) It reduces the deductible to $50.
When he became risk manager of Boller Company, Derrick Huang noticed that the
company did not have a clear set of risk management objectives and a clearly-stated
risk management philosophy. Derrick developed a written document stating the
company’s risk management objectives and risk management philosophy. This
document is called a risk management
A) policy statement.
B) manuscript policy.
C) matrix.
D) binder.
Peggy is an independent insurance agent who places substantial amounts of business
with XYZ Insurance Company. XYZ pays Peggy a bonus when she meets a sales goal.
XYZ also allows Peggy to recruit and train sub-agents. She receives additional
commissions based on the sales generated by the sub-agents. Based on this description,
we can conclude that Peggy is a
A) direct writer.
B) personal producing general agent.
C) multiple line exclusive agent.
D) broker.
Which of the following is a financial derivative that derives value from specific
insurable losses or from an index of values?
A) commodity futures contract
B) credit default swap
C) catastrophe bond
D) insurance option
All of the following are examples of tort reform proposals EXCEPT
A) modifying the collateral source rule.
B) eliminating caps on noneconomic damages.
C) regulation of attorney fees.
D) imposing penalties to deter frivolous lawsuits.
Which of the following is an intentional tort?
A) slander
B) negligence
C) strict liability
D) murder
One provision of the Affordable Care Act is the creation in each state of a new and
transparent marketplace where individuals and small employers can purchase
affordable, qualified, health insurance plans. This marketplace is called a(n)
A) residual pool.
B) catastrophic health insurance pool.
C) FAIR plan.
D) insurance exchange.
The practice of buying the life insurance policy of a terminally ill insured at a discount
is referred to as a
A) collateral assignment.
B) viatical settlement.
C) catastrophic illness conversion.
D) grace period transaction.
Steve was involved in an auto accident. Both drivers were partially at fault for the
accident. Steve’s actual damages were $50,000. He was judged to be 60 percent at fault.
If Steve’s state has a 51 percent rule for comparative negligence, how much will Steve
collect?
A) $0
B) $20,000
C) $30,000
D) $50,000
Which of the following is a financial risk that may be faced by a business organization?
A) injuries suffered by employees at the workplace
B) lost income after a fire loss
C) product liability risk
D) currency exchange rate risk
In the optional replacement cost coverage provision is not selected, how are losses
settled under the building and personal property (BPP) coverage form?
A) market value
B) original purchase price
C) actual cash value
D) book value
Becky is considering the purchase of a whole life policy on her own life. She is
concerned that if she becomes disabled, paying premiums will become a burden. Which
provision can Becky attach to her life insurance policy to address this concern?
A) guaranteed purchase option
B) waiver-of-premium provision
C) accidental death benefit rider
D) accelerated death benefits rider
Some employers offer employees a choice of health care plans which are designed to
make employees more sensitive to health care costs, to provide an incentive to avoid
unneeded care, and to seek low-cost health care providers. Such plans are called
A) employee assistance plans.
B) consumer-directed health plans.
C) cafeteria plans.
D) preferred provider organization (PPO) plans.