Beth was injured at work and is eligible to receive workers compensation benefits. All
of the following benefits are provided under workers compensation EXCEPT
A) disability income.
B) retirement benefits.
C) rehabilitation.
D) medical care.
Which of the following statements is (are) true regarding the net present value of a
capital investment?
I. Net present value does not consider time value of money.
II. A positive net present value represents an increase in value to the firm.
A) I only
B) II only
C) both I and II
D) neither I nor II
Damages awarded for losses that can be determined or measured are
A) special damages.
B) general damages.
C) punitive damages.
D) comparative damages.
All of the following are nonforfeiture options found in cash value life insurance policies
EXCEPT
A) cash value.
B) reduction of premiums.
C) reduced paid-up insurance.
D) extended term insurance.
Hedge Fund Company offers a mutual fund to investors. Fund managers are concerned
about fund volatility. They analyzed the fund to determine the worst loss likely to occur
in a calendar quarter, assuming a 90 percent level of confidence. The worst probable
loss is known as the fund’s
A) unrealized capital gain.
B) value at risk.
C) beta coefficient.
D) surrender value.
After all of the provisions of the Affordable Care Act are implemented, which of the
following statements will be true?
I. Health insurers cannot use pre-existing conditions exclusions.
II. Health insurers cannot impose annual benefit limits and lifetime benefit limits.
A) I only
B) II only
C) both I and II
D) neither I nor II
During the financial crisis, the U.S. federal government stepped-in to prevent the
financial failure of the world’s largest insurer, the American International Group (AIG).
AIG’s near insolvency was caused by
A) catastrophic hurricane and earthquake losses that were not reinsured.
B) fraudulent accounting practices that had inflated earnings for many years.
C) losses on derivative loan guarantees issued by the company.
D) over-investment in U.S. equity markets and the sharp drop in U.S. equity values.
Ted’s insurance claim was denied by XYZ Insurance Company. When Ted inquired why
the claim was denied, he was told to, “Read the exclusion on page 5 of the policy.” Ted
read the exclusion. In his opinion, the exclusion was poorly worded and vague. If a
court of law agrees with Ted’s assessment of the exclusion, Ted may still be able to have
his claim paid by the insurer because insurance contracts are
A) personal contracts.
B) unilateral contracts.
C) aleatory contracts.
D) contracts of adhesion.
Katelyn was just named Risk Manager of ABC Company. She has decided to create a
risk management program which considers all of the risks faced by ABC – pure,
speculative, operational, and strategic – in a single risk management program. Such a
program is called a(n)
A) financial risk management program.
B) enterprise risk management program.
C) fundamental risk management program.
D) consequential risk management program.
Bruce lied about his health history when he purchased a life insurance policy. He died 3
years after the policy was issued. Which life insurance policy provision will require the
life insurer to pay the beneficiary even though Bruce lied on the application?
A) incontestable clause
B) entire contract clause
C) ownership clause
D) change-of-plan provision
Small business owners have a number of retirement plans available to them. One type
of plan is limited to employers with 100 or fewer eligible employees. Under this type of
plan, small employers are exempt from most of the nondiscrimination and
administrative rules that apply to qualified plans. Such plans are called
A) Keogh plans.
B) SIMPLE retirement plans.
C) cash balance plans.
D) simplified employee pension (SEP) IRAs.
As of this year, Brad, age 50, has 40 credits under the Social Security program. These
credits were all earned in the last 10 years. What is Brad’s insured status under the
program?
A) He is currently and fully insured.
B) He is currently insured, but not fully insured.
C) He is fully insured, but not currently insured.
D) He is neither currently insured nor fully insured.
To correct abuses in the financial services industry, Congress passed an Act in 2010 that
included numerous provisions to reform the financial services industry. This Act was
the
A) Financial Modernization Act.
B) McCarran-Ferguson Act.
C) Dodd-Frank Act.
D) Biggert-Waters Act.
According the 2001 CSO mortality table, the yearly probability of dying for a 40
year-old man is .00165. The present value of $1 one year from today, assuming a 5.5
percent interest rate, is .9479. What is the net single premium per $1,000 for a one-year
term insurance policy sold to a man at age 40 assuming a 5.5 percent interest rate?
Assume the premium is paid at the start of the year and the death benefit is paid at the
end of the year.
A) $1.56
B) $2.45
C) $7.18
D) $952.81
Which of the following statements about various types of surety bonds is true?
A) A judicial bond guarantees that a public official will faithfully perform his or her
duties for the protection of the public.
B) A payment bond guarantees that the bonded person will appear in court.
C) A license and permit bond guarantees that the bonded party will comply with all the
laws and regulations governing his or her activities.
D) A bid bond guarantees that the principal will complete a construction project on
time.
Which of the following statements about hospice benefits under the hospital insurance
(Part A) portion of Medicare is (are) true?
I. Hospice benefits are payable only while the beneficiary is hospitalized.
II. Hospice benefits are provided to persons who are terminally ill.
A) I only
B) II only
C) both I and II
D) neither I nor II
Which of the following statements about underwriting standards is (are) true?
I. One purpose of underwriting standards is to reduce adverse selection against the
insurer.
II. Equitable rates should be charged so that each group of policyowners pays its own
way in terms of losses and expenses.
A) I only
B) II only
C) both I and II
D) neither I nor II
Easy Pay Insurance Company may require insureds who suffer a loss to submit a sworn
statement to substantiate that a loss occurred and to describe the conditions under which
the loss occurred. This sworn statement is called a(n)
A) binder.
B) proof of loss.
C) inspection report.
D) notice of loss.
Which of the following statements about indexed universal life insurance is true?
A) It is another name for variable life insurance.
B) Although a minimum interest rate is guaranteed, the rate credited can be higher if a
specified stock index performs well.
C) The cash value is usually credited with 100 percent of the return on the equity index,
including dividends paid on the stocks in the index.
D) The formula used to determine the additional interest credited to the policy places no
limit on the additional interest that can be credited.