Which of the following statements about the risk of terrorism in the United States is
(are) true?
I. Congress created a federal backstop for terrorism claims.
II. Coverage for losses attributable to terrorism is not marketed by private insurers in
the U.S.
A) I only
B) II only
C) both I and II
D) neither I nor II
An automobile that is a total loss as a result of a collision is an example of which of the
following types of risk?
I. Speculative risk
II. Diversifiable risk
A) I only
B) II only
C) both I and II
D) neither I nor II
Prior to passage of the Affordable Care Act, insurers could go back to the date a health
insurance policy became effective and render the policy void due to a clerical error.
This practice, which is prohibited under the Affordable Care Act except in cases of
fraud or intentional misrepresentation of a material fact, is called
A) estoppel.
B) retention.
C) rescission.
D) reformation.
Liability arising out of which of the following is covered under Coverage E of an
unendorsed Homeowners 3 policy?
A) use of the insured’s auto on a public road
B) use of the insured’s golf cart at a golf course
C) use of the insured’s motorcycle on a highway
D) use of the insured’s 40-foot boat with a 200 horsepower engine
Which of the following losses is generally covered under a commercial umbrella
policy?
A) liability arising out of workers compensation laws
B) liability arising out of pollution
C) liability arising out of use of a business auto
D) the cost of recalling defective products
Valerie’s home does not qualify for coverage under a standard homeowners policy.
Valerie would like to have “open-perils” (all-risks) coverage on her dwelling and
named-perils coverage on her personal property. Which of the following policies should
Valerie purchase?
A) Dwelling Property 1 – Basic Form
B) Dwelling Property 2 – Broad Form
C) Dwelling Property 3 – Special Form
D) All of these policies provide “open perils” coverage on the dwelling and
named-perils coverage on personal property.
Alex, age 26, purchased a 20-payment whole life insurance policy. After Alex has made
20 premium payments, his life insurance policy is considered
A) matured.
B) reduced.
C) expired.
D) paid-up.
Which of the following statements about life income settlement options is (are) true?
I. Under a joint-and-survivor life income option, payments cease at the death of the first
annuitant.
II. Under a life income with guaranteed period, a contingent beneficiary is guaranteed a
minimum number of payments regardless of when the primary beneficiary dies.
A) I only
B) II only
C) both I and II
D) neither I nor II
John Jones is risk manager of Alpha-2-Omega Company. John wants coverage for
“direct physical loss” (“open perils” coverage) under the business and personal property
(BPP) coverage form. Which causes-of-loss form should he select?
A) special form
B) basic form
C) standard form
D) broad form
Cal purchased a whole life policy 6 years ago. The policy requires annual premium
payments. Cal forgot to pay the premium that was due 2 weeks ago. He wonders if his
life insurance is still in force. Which life insurance policy provision is designed to keep
the policy in force for a short time even if the premium payment is late?
A) waiting period
B) grace period
C) guaranteed purchase option
D) reinstatement clause
Dave purchased a life insurance policy. The policy is nonparticipating and the cash
values are based on the insurer’s present mortality, investment, and expense experience.
After 2 years, the insurer will recalculate the premium based on the mortality,
investment, and expense experience at that time. Dave purchased
A) current assumption whole life.
B) variable life insurance.
C) universal life insurance.
D) variable universal life insurance.
The section of the insurance policy that includes provisions that qualify or limit the
insurer’s promise to perform is the
A) definitions.
B) insuring agreement.
C) exclusions.
D) conditions.
Which of the following statements about Blue Cross and Blue Shield plans is (are) true?
I. Blue Cross and Blue Shield plans can be organized on a nonprofit basis or on a
for-profit basis.
II. Blue Cross provides coverage for hospital services; Blue Shield provides coverage
for physicians’ and surgeons’ fees.
A) I only
B) II only
C) both I and II
D) neither I nor II