Complete the mcq:
1 Workers leaving a group due to termination or choice can continue with group health coverage, for a price, which is offered through:
FMLA
COBRA
HIPAA
ERISA
2 In a negligence lawsuit, the main and first function of the jury is to:
assist the judge in interpreting the law.
determine the facts.
decide guilt or innocence.
make sure neither plaintiff nor defendant cheats in presenting their case.
3 Which of the following employers is not eligible to establish a 401(k) plan:
Winn Dixie
Xerox
Regions Bank
Social Security Administration
4 Bob works as a claims adjuster. He is hired by insurance companies on a contract basis to adjust claims when they need his services. What kind of claims adjuster is Bob?
independent
public
private
direct
5 The Medical Payments coverage in the HO-2 policy covers all of the following except:
a guest slips and falls in the shower.
during a delivery, a milkman stumbles over a child's wagon and breaks his leg.
the insured stumbles down the porch while entering his own home and breaks his arm.
the insured accidentally hits someone with a golf ball on the golf course; the person needs medical treatment.
6 Mr. Xavier has an HO-2 contract with $ 100,000 on the dwelling and $50,000 on personal property. There is a $500 deductible and the property is 50% depreciated. Sewage backs up into the basement and destroys the furnace and the other appliances in the basement. Replacement cost of the damage is $8,000. The policy will pay:
nothing because of the water damage exclusion.
nothing because the property is not covered.
$7,500 because of replacement cost coverage.
$3,500 because of actual cash value and the deductible.
7 Determinations of disability are made by:
Social Security Administration
Congress
State agencies
Federal Insurance Contributions Act
8 Unemployment insurance is similar to private insurance because:
there is no contract between insured and insurer
unemployment insurance lacks accuracy in predictions and may suffer losses
both employers and customers pay for any losses
payments for losses are funded in advance
9 All of the following losses are covered in an HO-2 policy except:
damage done to the house by neighborhood vandals.
damage done to shrubbery during a hostile fire.
loss of use of the property following a hostile fire.
damage done to the building and contents caused by a flash flood.
10 Assessment mutuals:
do much less business than advance premium mutuals.
do a lot more business than advance premium mutuals.
do about the same amount of business as advance premium mutuals.
are shareholder owned.
11 The named insured leaves a suitcase filled with clothing on the seat of his unattended, unlocked automobile. The loss is valued at $900 replacement cost and a depreciated value of $700. The HO-2 contract has a $200 deductible on Section I. How much will the HO-2 contract pay for this loss?
$0 (because the clothing was in an automobile).
$700.
$500.
$200.
12 Under the provisions of the Standard Fire Policy, assignment is:
specifically prohibited.
permitted but requires an additional premium.
not mentioned because insurance policies are personal contracts.
valid only with the written consent of the company.
13 "Binders" are typically used with:
life and health insurance.
property and liability insurance.
life and liability insurance.
health and property insurance.
14 Which of the following is NOT a direct social benefit of the insurance mechanism?
Increased business and social stability.
Better allocation of society's resources.
Better choice of optimum size of business operations.
Lower federal and state income taxes.
15 The purpose of the waiting period in disability income insurance is to:
eliminate payments for minor illness.
provide larger benefits to the insured.
provide indirect loss coverage.
increase the premium for the contract.
16 The individual consumer must ultimately deal with several issues to make an efficient purchase in the insurance market. Which of the following generally should not be a major consideration?
The type of policy covering the exposure(s).
The maximum amount of insurance coverage.
The commission the agent will receive from the sale.
The insurance agent's expertise.
17 In all cases, the premium for worker's comp insurance is based on:
the workman's compensation board
an employee's benefits
an employer's payroll
a state's regulations
18 The cost to employers has risen dramatically over the last fifteen years, primarily because of:
rising health care costs
cost of funding retirement income
wages and salaries
reimbursement for educational expenses
19 The most difficult and important step in the risk management process generally is:
evaluating risk.
reviewing the program.
selecting the best method(s) to handle the risk.
identifying the risk.
20 The Social Security program is primarily funded by:
government securities
a tax on wages
invested assets
disability benefits
21 Factors contributing to the calculations for group insurance premiums include all except:
group demographics
group size
settlement options
company stability
22 Which of the following statements is false concerning the taxation of life insurance?
Beneficiaries receive death benefits free from any federal taxation.
The value of the life insurance death benefit is always included in the insured's estate.
If a non-insured/owner dies, the value included in the decedent's estate is approximately the cash value of the insurance contract.
Interest earned on settlement proceeds is taxable.
23 Which of the following is the purpose of reserve requirements?
To force the insurer to maintain a minimum amount of assets.
To allow the insurer to earn investment income.
To allow the insurer to charge higher premiums.
To set money aside for fixed asset acquisition.
24 Jeremy's home is burglarized. He finds that $5,000 worth of stereo equipment is missing. He tells the insurance company that the stereo equipment was worth $15,000. This overstatement of the loss is an example of:
a morale hazard.
a peril.
insurance fraud.
carelessness.
25 Which of the following is a contract of indemnity (as strictly defined)?
life insurance.
replacement cost insurance.
legal liability insurance.
valued insurance policies.
26 The aggregate increased cost to society of operating the insurance mechanism includes all of the following except:
cost of operating the insurance company.
losses due to uninsured flood losses.
the occurrence of intentional losses to collect insurance.
the tendency for insureds to exaggerate the amount of actual losses in the claim process.
27 Which of the following life insurance policies would have the lowest premium for a male age 35?
level term.
whole life continuous premium.
whole life paid up at 45.
variable life.
28 The principle of insurable interest is important because it:
makes insurance companies happy.
supports the principle of indemnity.
makes insurance interesting.
prevents an insurer from subrogating against a negligent third party.
29 Social Security is categorized as a:
public assistance program
private insurance program
social insurance program
private assistance program
30 Life insurance provides protection against:
dying before an insured's financial obligations have been met.
outliving your income.
the probability of dying increasing as you grow older.
loss of income due to disability.
31 A production bottleneck could be best identified by using:
interviews with line employees.
interview with upper management.
accounting statements.
flow chart.
32 Which of the following do not directly represent the insurance company?
public adjusters
the insurance agent
the independent adjustment bureau
company adjusters
33 Mabry's house is burglarized, and $12,000 of jewelry is stolen. What is the maximum amount her HO-2 policy, will pay for this loss?
$12,000.
$9,600.
$2,500.
$1,500.
34 Which of the following is not an argument for federal regulation?
There will be substantial improvement in efficiency due to fewer jurisdictional requirements.
There will be less influence over federal regulators by insurance companies.
More expertly trained personnel.
It will bring more tax money to the federal government.
35 The term "salvage" as it relates to the insurance transaction means the:
cost of cleaning up after a natural disaster.
remaining insurance premium not needed after a peril destroys one's property.
amount of the claim the insured is responsible for paying.
amount received by the insurance company when damaged property is sold.
36 You are applying for homeowners' insurance, and the application for overage asks if you have ever been convicted of a crime. Why does the insurer care if you have a criminal record?
It tarnishes the company's image to sell to former convicts.
By law, convicted criminals are not entitled to own property, and thus cannot be issued property insurance policies.
A criminal background, especially one involving destruction or theft of property, indicates that you are a potential moral hazard.
Underwriters are notorious for asking personal .
37 When you have an auto accident that is your fault, your PAP's Liability coverage will pay for all of the following except:
bodily injuries of your family members riding with you.
bodily injuries of non-family members who are passengers in your car at the time of the accident.
bodily injuries of your best friend who is a passenger in your car at the time of the accident (moderate).
the cost to repair or replace property belonging to others that you damaged in the accident.
38 Which of the following is true about the supply and demand curves for insurance?
The demand for insurance is very elastic and sensitive to price.
As price declines, the demand for insurance increases dramatically.
The supply of insurance increases dramatically with a decrease in the price.
Insurers will tend to reduce supply if the price is artificially increased or decreased.
39 Which of the following is not a peril?
car collision
vandalism
earthquake
faulty wiring
40 Job-related disabilities that result over many years of employment are called:
cumulative injuries
permanent partial disabilities
contributory disabilities
temporary partial disabilities