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) current outstanding debts, including mortgage debt. ANSWER Answer: C
Which of the following statements regarding convertible term insurance is true? A) Evidence of insurability must be provided to convert the policy. B) More term policies are converted using the original-age method than using the attained-age method. C) The converted coverage has a lower face amount than the term coverage. D) The annual premium for […]
As an alternative to coinsurance, rate discounts can be given as the amount of insurance to value increases. This alternative is called A) graded rates. B) agreed value coverage. C) retrospective rating. D) manual rating. ANSWER Answer: A
Jane purchased a $50,000 liability insurance policy from Insurer A. Fearing that she did not have enough liability insurance, she purchased an additional $100,000 of liability coverage from Insurer B. As a result of a negligent act, Jane was ordered to pay $75,000 in damages. Assuming the coverage from Insurer A is primary and the […]
James purchased liability insurance with a $100,000 limit from Insurer A. When Insurer A denied a claim that James thought should be covered, he bought a second liability insurance policy with a $150,000 limit from Insurer B. Before he cancelled the policy with Insurer A, a $60,000 loss occurred. If this loss is settled on […]
An elimination (waiting) period is an example of a(n) A) exclusion. B) deductible. C) other-insurance provision. D) coinsurance provision. ANSWER Answer: B
The section of the insurance policy that includes provisions that qualify or limit the insurer’s promise to perform is the A) definitions. B) insuring agreement. C) exclusions. D) conditions. ANSWER Answer: D
A special coverage policy is a policy that A) has no exclusions. B) provides open-perils coverage. C) provides coverage under special conditions. D) has coverage for multiple lines of insurance. ANSWER Answer: B
Maria’s home was damaged by an earthquake. As Maria has open-perils coverage on her home, she was surprised to learn that her loss was not covered. Which section of a property insurance policy specifies which perils, property, and types of losses are not covered? A) the declarations B) the exclusions C) the conditions D) the […]
Roger owns some farmland that he rents to a tenant. The tenant lives in an old farmhouse on the property and raises crops on the land. Roger is concerned about possible legal liability if the tenant injures someone. Roger requires the tenant to have liability insurance and to add himself to the liability coverage through […]
