QUESTION Which insurance term is correctly paired with its definition? A) premium: a notice by the insured to the insurer that payment is expected to cover a loss B) reserves: the specified amount that a policyholder must pay toward a loss before the insurer will pay anything C) deductible: funds received from premiums and left […]
QUESTION Which of the following is an example of speculative risk? A) Miguel runs a nursery and sells starter plants in the spring. He has insurance against loss of inventory due to a late spring frost. B) Penelope works as a book editor from her home office. She has insured her office equipment against fire […]
QUESTION Who is most likely to pay the least for life insurance? A) firemen B) journalists C) loggers D) farmers E) roofers ANSWER Answer: B Explanation: B) Firemen, loggers, farmers, and roofers all experience high fatality rates. Workers in the information industry suffer few fatal work injuries.
QUESTION Which of the following involves speculative risk? A) boycotts B) hurricanes C) arson D) lightning strikes E) new products ANSWER Answer: E Explanation: E) Speculative risk involves a chance of either gain or loss. This is the kind of risk that a company takes when it introduces a new product, which may make […]
QUESTION Which insurance principle is correctly paired with its definition? A) principle of economically feasible premium: the principle that states that insurers will not pay the insured more in damage claims than the dollar loss actually sustained B) principle of indemnity: the principle that groups that are more apt to need insurance are also those […]
QUESTION Bryce hired a contractor to fix a leak in the roof of the musical instrument factory where he worked as facilities manager. The contractor came and removed the rotted wood from the roof, covered the hole with a tarp, and promised to be back the next day. The contractor did not show up for […]
QUESTION Who is most likely to pay the most for life insurance? A) teachers B) construction workers C) crab fishermen D) engineers E) doctors ANSWER Answer: C Explanation: C) The fatality rate for commercial fishing workers, who are routinely exposed to stormy seas, dangerous equipment, and slippery decks, is 200 fatalities per 100,000.
QUESTION Copayments are fixed fees that subscribers must pay for the use of specific medical services. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Copayments must be paid by the subscriber at the time of service.
QUESTION Which type of public insurance are people required to carry? A) crop insurance B) crime insurance C) flood insurance D) social security insurance E) nuclear accident insurance ANSWER Answer: D Explanation: D) Most working Americans (and their employers) are required to pay into Social Security, which is a federal social insurance program that […]
QUESTION Which kind of company would be least likely to purchase the pure-risk coverage of green insurance? A) contractors B) energy auditors C) oil companies D) hotels E) recycling companies ANSWER Answer: C Explanation: C) Green insurance is insurance in which a green contractor who builds a home out of recycled old beams and […]
