All of the following are ISO commercial crime coverage exclusions EXCEPT
A) dishonest acts committed by a named insured or partner of the named insured.
B) indirect loss resulting from covered losses.
C) theft committed by an employee of the named insured.
D) losses from unauthorized trading in stocks and bonds.
A reinsurance contract that is entered into on a case-by-case basis after an application
for insurance is received by a primary insurer is called
A) a reinsurance pool.
B) automatic treaty reinsurance.
C) retrocession.
D) facultative reinsurance.
Barb, who is self-employed, is the main breadwinner for her family. Barb does not have
disability income insurance because she has never stopped to consider the impact of a
long-term disability upon her family. Barb’s treatment of the risk of disability is best
described as
A) risk transfer.
B) passive retention.
C) risk avoidance.
D) active retention.
A life insurance policyholder may no longer need life insurance. Such a policyholder
may sell the policy to a third party for more than its cash value. The purchaser becomes
the new beneficiary and is responsible for subsequent premium payments. Such a
financial transaction is called a(n)
A) collateral assignment.
B) accelerated death benefits rider.
C) absolute assignment.
D) life settlement.
Which of the following statements concerning defined benefit and defined contribution
pension plans is (are) true?
I. The employer bears the investment risk with a defined contribution plan.
II. Defined benefit plans favor workers who enter the plan at older ages.
A) I only
B) II only
C) both I and II
D) neither I nor II
Laura Evans is risk manager of LMN Company. Laura decided to retain certain
property loss exposures. Which of the following is a method that Laura can use to fund
the retained property losses?
A) current net income
B) private insurance
C) noninsurance transfer
D) high deductibles
Actuaries at Term Life Insurance Company calculated the net single premium per
thousand for a five-year term policy for a man age 32 to be $5.04. To calculate the net
level premium for this policy, the net single premium should be
A) divided by 5.
B) divided by the future value life annuity due factor for $1 for five years.
C) divided by the present value life annuity due factor for $1 for five years.
D) divided by the present value ordinary life annuity factor for $1 for five years.
Most insurance companies require their marketing representatives to submit an
evaluation of the prospective insured. This important source of underwriting
information is called the
A) application.
B) agent’s report.
C) inspection report.
D) physical inspection.
Traditionally, tables have been prepared showing how long IRA funds will last based on
rates of return and annual withdrawal rates. These tables, however, assume constant
returns over the projection period. Many financial planners are now using a technique
that allows for fluctuations in market returns. A computer is programmed to estimate
how long funds will last under many different return scenarios and to determine the
probability that funds will last until a specified age. This technique is called
A) decision-tree analysis.
B) sensitivity analysis.
C) computer simulation.
D) cost-benefit analysis.
Which of the following statements about the appraisal clause in the Homeowners 3
policy is (are) true?
I. It is used to determine a value for personal property when the policy is issued.
II. It is used to help settle disputes over the amount of a loss after a loss has occurred.
A) I only
B) II only
C) both I and II
D) neither I nor II
Reasons for the unearned premium reserve include which of the following?
I. To pay losses that occur during the policy period.
II. To pay premium refunds to policyholders in the event of cancellation.
A) I only
B) II only
C) both I and II
D) neither I nor II