Archives: Quiz

Which of the following statements about term insurance is true? A) The coverage is appropriate if the goal is permanent lifetime protection. B) Most policies can be renewed for additional periods without evidence of insurability. C) Premiums increase at a […]

Which of the following statements about reinsurance facilities for insuring high-risk drivers is (are) true? I. Underwriting losses in the reinsurance facility are shared by all auto insurers in the state. II. An insurer must accept all applicants for insurance, […]

Why can an insurer refuse to pay a claim if an insured fails to abide by the policy provisions? A) because insurance contracts are aleatory B) because insurance contracts are unilateral C) because insurance contracts are conditional D) because insurance […]

Which of the following statements regarding insurance and gambling is (are) true? I. Insurance is used to handle existing pure risks, while gambling creates a new speculative risk. II. Insurance usually involves risk avoidance, while gambling typically involves only risk […]

Why are some mutual insurers referred to as “assessment mutuals”? A) They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written. B) They are noted for being very thorough in their […]

The phrase “general liability” is used to refer to the legal liability of a business arising from all of the following EXCEPT A) employees injured on the job. B) defective products. C) liability assumed by contract. D) completed operations. Which […]

Some investors decided to start an insurance company. Each investor contributed $50,000 to raise the capital required to charter a new company. Each investor received an ownership interest in the company. The company will raise additional capital by selling ownership […]

A score derived from an individual’s credit history and other factors that is used by many auto and homeowners insurers for underwriting and rating purposes is called a(n) A) CLUE score. B) insurance score. C) expense ratio score. D) combined […]

Which of the following statements about the insurer’s obligation to provide a legal defense under the personal liability coverage (Coverage E) of the homeowners policy is (are) true? I. The insurer agrees to defend the insured only if the suit […]

An insurance policy provision that specifies how a property loss will be settled if more than one property insurance policy covers the loss is the A) insuring agreement provision. B) loss settlement provision. C) other insurance provision. D) coinsurance provision. […]

Which of the following statements about trust fund plans is (are) true? I. The trustee typically purchases annuities for retiring employees. II. The trustee guarantees the adequacy of the fund to pay the promised benefits. A) I only B) II […]

Which of the following statements about property and casualty insurance company operating results is (are) true? I. An insurance company can have a combined ratio greater than 1 (or 100 percent) and still be required to pay income taxes. II. […]

Acme Company has three identical manufacturing plants, one on the Texas Gulf Coast, one in southern Alabama, and one in Florida. Each plant is valued at $200 million. Acme’s risk manager is concerned about the damage which could be caused […]

Which of the following statements about Lloyd’s of London is true? A) Coverage is actually written by syndicates who belong to Lloyd’s of London. B) New individual members or Names who belong to the various syndicates have unlimited legal liability. […]

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 […]

Which of the following statements about treaty reinsurance is true? A) Under a surplus-share treaty, 100 percent of the ceding insurer’s liability must be transferred to the reinsurer. B) Using a quota-share treaty increases the ceding insurer’s unearned premium reserve. […]

A Pony Express Armored Car was transporting bank receipts from six branch banks to the main bank. A group of robbers staged a daring robbery. They forced the armored car off the road, shot two guards, and took over $120,000 […]

Which of the following statements about endowment insurance policies is (are) true? I. The face amount is paid if the insured dies during the policy period or at the end of the policy period if the insured is still alive. […]

The major difference between the dwelling coverage (Part A) of the Homeowners 2 (Broad From) policy and the Homeowners 3 (Special Form) policy is that A) the HO-3 provides open perils (“all risks”) coverage and the HO-2 provides named-perils coverage. […]

Which statement concerning towing and labor coverage under the PAP is (are) true? I. There’s no coverage for towing if the auto breaks down – towing is only covered if the auto needs to be towed after a collision has […]

Sarah is using the needs approach to determine how much life insurance to buy. Her cash needs are $30,000; her income needs are $140,000; and special needs are $100,000. Sarah has the following assets: $20,000 in bank accounts, $30,000 in […]

Which of the following statements is (are) true with respect to the Medicare Advantage Plans? I. These plans replace the original Medicare program, Parts A and B, which are no longer available to new retirees. II. These plans provide an […]

One of the additional coverages under the building and personal property coverage form is “increased cost of construction.” The coverage is payable if A) a skilled artisan is needed to duplicate the construction of the damaged property. B) a labor […]

Liability arising out of which of the following is covered under the personal injury endorsement to the homeowners policy? A) property damage liability B) false arrest C) bodily injury D) business liability Which of the following statements about variable life […]

Which of the following statements about a worker’s primary insurance amount is (are) true? I. It is the monthly amount paid to a worker who elects early retirement at age 62. II. It is equal to 50 percent of the […]

Consolidation in the insurance industry is a continuing trend. One area where mergers and acquisitions frequently occur is between marketing intermediaries who represent insurance purchasers. These intermediaries are called A) insurance adjusters. B) insurance agents. C) insurance underwriters. D) insurance […]

Jan was injured in a work-related auto accident. She sued the other driver, and the case went to court. While questioning Jan, the defendant’s lawyer asked if her injuries and lost earnings were covered under workers compensation. Jan’s lawyer objected […]

XYZ Insurance Company markets a wide range of coverages. One type of coverage provides monetary compensation if a bonded party fails to perform certain acts. This coverage is called A) property insurance. B) liability insurance. C) a fidelity bond. D) […]

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 […]

Which of the following statements about stock insurers is true? A) They issue assessable policies. B) They are not permitted to write property and liability insurance. C) Stockholders bear any losses and share in any profits. D) They are owned […]

A provision in a disability income insurance policy that requires a person to be disabled for 60 days before receiving benefits is an example of a(n) A) calendar year deductible. B) grace period. C) elimination period. D) probationary period. The […]

Which homeowners policy is designed for the tenants of rented premises? A) Homeowners 2 B) Homeowners 4 C) Homeowners 6 D) Homeowners 8 MLX Drug Company would like to market a new hypertension drug. While the Food and Drug Administration […]

A property and liability insurance company’s loss ratio was 74 percent in 2011, 68 percent in 2012, and 66 percent in 2013. The same insurer’s expense ratio was 31 percent in 2011, 33 percent in 2012, and 30 percent in […]

All of the following provisions under the Affordable Care Act have an impact on the current Medicare Program EXCEPT A) free preventative care for seniors. B) additional funding to reduce fraud in the Medicare Program. C) free rest home care […]

All of the following are considered to be uninsured vehicles for purposes of the uninsured motorists coverage of the PAP EXCEPT A) a vehicle owned by an individual who is insured, but for less than the amount required by the […]

Which of the following pieces of information is needed to calculate a person’s human life value? A) the marital status of the person. B) the person’s estimated annual Social Security benefits after retirement. C) the person’s cost of self-maintenance. D) […]

Jerry built a home in a flood plain. He did not purchase flood insurance. Recently, a noted meteorologist predicted torrential rains for the area for the next 7 days. Jerry attempted to purchase flood insurance through the National Flood Insurance […]

Which of the following forms is used to insure buildings that are under construction? A) builders risk coverage form B) floor plan coverage form C) new construction coverage form D) labor and materials coverage form Which of the following statements […]

A slotting allowance is a form of _____. a. channel conflict b. short-run strategy by a manufacturer c. channel cooperation d. electronic data interchange A 100 percent markup at cost equals what markup at retail? a. 20 percent b. 40 […]

Unbranded, no-frills goods are classified as _____. a. generics b. private brands c. manufacturer brands d. scrambled merchandising A significant difference between the organizational structure used by a chain retailer and by a diversified retailer is that the chain retailer […]

The most common form of vertical marketing system is _____. a. independent vertical marketing system b. partially integrated marketing system c. fully integrated marketing system d. a retail cooperative The evolution of the conventional supermarket into combination stores and supercenters […]

A store’s merchandise is categorized and displayed by common end uses in a _____ product grouping. a. functional b. market segment c. purchase motivation d. storability A retailer that increases its product line assortment width by adding new products unrelated […]

Which act prevents large retailers from using their bargaining power to receive price concessions not warranted by their sizable orders? a. Miller-Tydings Act b. Cellar-Kefauver Act c. Federal Trade Commission Act d. Robinson-Patman Act Information search involves generating a list […]

A retailer specifically attempts to increase its average sale through carrying complementary goods and services in _____. a. cross-merchandising b. impulse sales c. scrambled merchandising d. merchandising Which computer-based site-selection model generally includes the largest number of variables? a. analog […]

A retailer tries to appeal to consumers’ one-stop shopping needs through _____. a. the retail life cycle b. vertical marketing systems c. the wheel of retailing d. scrambled merchandising A mystery shopper is a form of which primary data collection […]

A string is composed of _____. a. a supermarket or a variety store and convenience-oriented stores b. at least one major department store and a broad group of specialty stores c. at least one junior department store, a variety store, […]

An objective, easily identifiable, and measurable population characteristic is called a(n) _____. a. AIO inventory b. demographic statistic c. lifestyle measure d. reference group measure A retailer with sales of $10 million and selling expenses of $3 million has an […]

All of the activities involved in managing the retailer’s physical facilities comprise _____. a. store maintenance b. merchandising c. energy management d. operations management Under what condition would it be rational for the trading areas of two branch locations to […]

An example of a product/trademark franchise is a _____ franchise. a. McDonald’s fast-food b. Wendy’s fast-food c. Super 8 hotel d. Chevrolet auto dealership A retailer’s planned expenditures for a given time period based on its expected performance is its […]

The distinction between internal and external secondary data is based on the _____. a. focus of the data (company or industry) b. firm collecting the data (government or commercial research house) c. cost of data collection d. source of the […]