Betty’s personal property is insured for $100,000 under her Homeowners 3 policy. If
she usually keeps some personal property at a mountain cabin that she owns, how much
coverage for this property is available under her homeowners policy?
A) $10,000
B) $20,000
C) $40,000
D) $50,000
The long-run relative frequency of an event based on the assumption of an infinite
number of observations with no change in the underlying conditions is called
A) objective probability.
B) objective risk.
C) subjective probability.
D) subjective risk.
Which of the following statements about the coverage of health care services under Part
A of Medicare is (are) true?
I. Services in the patient’s home are covered if the patient requires skilled care and
meets certain conditions.
II. Hospice care is available for beneficiaries with a terminal illness.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements regarding the use of retention is (are) true?
I. Retention is best used for loss exposures that have a low frequency and a high
severity.
II. A financially strong firm can have a higher retention level than a firm whose
financial position is weak.
A) I only
B) II only
C) both I and II
D) neither I nor II
A pharmaceutical company employs a young chemist who is responsible for three new
patents last year and for the development of the company’s two best-selling drugs. The
company purchased a large life insurance policy on the chemist. In this case, the
insurable interest requirement was met because of a(n)
A) ownership interest.
B) close family relationship.
C) pecuniary interest.
D) economic family relationship.
Which of the following statements concerning defined contribution pension plans is
(are) true?
I. The contribution rate is fixed.
II. The retirement benefit varies.
A) I only
B) II only
C) both I and II
D) neither I nor II
Ellen believes the value of the loss to her home is $30,000. The insurer has offered
$18,000 to settle the loss. If Ellen and the insurer cannot agree on the value of the loss,
which homeowners policy provision specifies how this dispute will be settled?
A) insurer’s option
B) appraisal clause
C) loss payment clause
D) mortgage clause
Which of the following statements is true concerning traditional and Roth IRAs?
A) The investment income portion of Roth IRA distributions must be reported as
taxable income.
B) Roth IRA contributions are tax deductible.
C) There are minimum distribution requirements for traditional IRAs.
D) There are no limits on the tax deductibility of traditional IRA contributions once the
account owner has reached age 50.
Section I of the Homeowners 3 policy provides coverage for which of the following?
A) loss of use
B) personal liability
C) disability of the homeowner
D) medical payments
Which of the following statements concerning the coverage of collapse of the dwelling
under an unendorsed Homeowners 3 policy is true?
A) There is no coverage for collapse, regardless of the cause of the collapse.
B) Collapse is covered if it is caused by one of the Coverage C perils.
C) If collapse is caused by an earthquake, the loss is covered.
D) There is no coverage for collapse unless the proper endorsement is added to the
policy.
All of the following are proposed solutions to the medical malpractice problem
EXCEPT
A) shortening the statute of limitations for filing lawsuits.
B) eliminating arbitration panels to resolve disputes.
C) placing limitations on contingent fees charged by attorneys.
D) placing limitations on damage awards.
The underwriting process begins with the
A) agent.
B) desk underwriter.
C) inspection report.
D) acceptance of the application.
Steve and Mary are art collectors. They own lithographs, etchings, and vintage
photographs valued at over $250,000. Steve and Mary display their art collection at
their home. They can insure this valuable personal property through a
A) title insurance policy.
B) dwelling property form.
C) personal articles floater form.
D) personal umbrella policy.
XYZ, Inc. would suffer serious financial consequences if either of its two major
customers were shut down and could not purchase XYZ products. Which of the
following types of consequential loss protection would provide protection against this
exposure?
A) leasehold interest
B) extra expense
C) marine insurance
D) business income from dependent properties
Which of the following statements is true regarding the Homeowners 3 policy and
identity theft?
A) Identity theft is covered under Coverage D – Loss of Use.
B) Identity theft is covered under Coverage C – Personal Property.
C) Identity theft is covered under Coverage E – Personal Liability.
D) Identity theft is covered by adding an endorsement.
Reasons why market, financial, and production risks are often uninsurable include
which of the following?
I. The potential to produce a catastrophic loss is great.
II. The chance of loss cannot be accurately estimated.
A) I only
B) II only
C) both I and II
D) neither I nor II