Which of the following statements is (are) true concerning high deductible health
plans?
I. An employee can withdraw money tax-free from a health savings account or health
reimbursement account to pay covered medical costs.
II. There is a cap on an employee’s out-of-pocket expenses under the plan.
A) I only
B) II only
C) both I and II
D) neither I nor II
Some physicians, hospitals, and health care organizations agree to make medical
services available to insureds at discounted prices. Insureds are not required to use these
entities, but if they do, care costs are less than if these entities are not used. Such health
care entities are called
A) preferred providers.
B) Health Maintenance Organizations (HMOs).
C) Blue Cross/Blue Shield Plans.
D) health savings accounts (HSAs).
Small Town used to be just that – a small town 6 miles from Large City. Over the years,
the area between Small Town and Large City has developed, and now Small Town is
part of the suburbs surrounding Large City. An auto insurer that operated in the area had
a large increase in auto claims from Small Town insureds. The insurer did not adjust its
rates, and this year will lose money because of claims attributable to higher population
density. Which business rating objective did this insurer fail to meet?
A) simplicity
B) stability
C) responsiveness
D) encouragement of loss control
Which of the following statements about beneficiary designations is (are) true?
I. The primary beneficiary is entitled to the death proceeds of a life insurance policy
only if the contingent beneficiary dies before the insured.
II. If a revocable beneficiary designation is used, the insured must obtain the
beneficiary’s permission of exercise most policy rights.
A) I only
B) II only
C) both I and II
D) neither I nor II
One provision of the Affordable Care Act provides the creation in each state of a
transparent and competitive insurance marketplace where individuals and small firms
with fewer than 100 employees can purchase affordable and qualified health coverage.
This marketplace is called a(n)
A) Medicaid plan.
B) Medicare plan.
C) Health Maintenance Organization (HMO).
D) Affordable Health Insurance Exchange.
A legal wrong for which the law allows a remedy in the form of money damages is a
A) crime.
B) breach.
C) misdemeanor.
D) tort.
Which of the following statements about the causes-of-loss special form of the ISO
commercial package policy is (are) true?
I. The causes-of-loss special form insures against direct physical loss.
II. The causes-of-loss special form excludes loss caused by earthquake.
A) I only
B) II only
C) both I and II
D) neither I nor II
What are the minimum age and service requirements that can be imposed on employees
eligible to participate in a retirement plan?
A) age 18 and 6 months of service
B) age 21 and 1 year of service
C) age 21 and 3 years of service
D) age 25 and 4 years of service
A firm wishing to insure a single shipment of merchandise sent by a common carrier
would purchase a(n)
A) annual transit policy.
B) trip transit policy.
C) bailee’s liability policy.
D) equipment floater.
Tony is 48 years old. He earned the maximum taxable wage base under Social Security
annually between the time when he was 26 and when he was 40. At age 40, he dropped
out of the workforce to care for children as his wife had a high-paying job. Which
statement is true regarding Tony’s insured status under Social Security?
A) Tony is fully insured and currently insured.
B) Tony is fully insured, but not currently insured.
C) Tony is currently insured, but not fully insured.
D) Tony is neither fully insured nor is he currently insured.
All of the following are arguments in favor of using an applicant’s credit record in
personal lines underwriting EXCEPT
A) Most consumers have good credit records and benefit when credit history is used as
a rating factor.
B) Use of credit data in underwriting and rating eliminates price discrimination against
minority groups when they purchase insurance from insurers.
C) Underwriting and rating may be more consistent if applicants’ credit histories are
considered.
D) There is high correlation between an applicant’s credit record and future claims
experience.
Which of the following is a fundamental purpose of the principle of indemnity?
A) to reduce moral hazard
B) to minimize physical hazards
C) to settle property insurance losses on a replacement cost basis
D) to require deductibles in all property insurance policies
Which of the following statements about the businessowners policy is (are) true?
I. It is designed to meet the insurance needs of large manufacturing firms.
II. It is a package policy designed to meet the basic property and liability needs of an
insured in a single contract.
A) I only
B) II only
C) both I and II
D) neither I nor II
The Commercial General Liability (CGL) Policy covers liability arising out of which of
the following loss exposures?
I. Bodily injury of an employee of the insured arising out of and in the course of
employment
II. Bodily injury of a customer injured by a defective product manufactured by the
insured
A) I only
B) II only
C) both I and II
D) neither I nor II