Deck 20: Life, Fire, and Auto Insurance

Question 1

The premium for fire insurance is found by the insured value divided by 100 times the table rate.

Answer 1

True

Question 2

The cash value of a life insurance policy is a cheap source of money.

Answer 2

True

Question 3

Permanent protection is provided by term insurance.

Answer 3

False

Question 4

All premiums for universal life remain the same.

Question 5

Term insurance would pay the face amount of the policy in case of the death of the insured.

Question 6

Twenty-payment life requires premiums for 20 years although the insured is protected till death.

Question 7

If the insurance company cancels a fire insurance policy, the refund to the insured will be less than if the insured cancels the policy.

Question 8

Extended term insurance means the policy continues but at a face amount that is less than the original policy.

Question 9

The premium is the payment(s)that is made to pay for the cost of an insurance policy.

Question 10

Term insurance builds up no cash value.

Question 11

The beneficiary pays the insurance to the insured.

Question 12

The one receiving the insurance coverage is the insured.

Question 13

Buying flight insurance at an airport is an example of straight-life insurance.

Question 14

Nonforfeiture values could result in the insured being paid the cash value of the policy and the policy being terminated.

Question 15

The short rate cancellation table is used if the insured cancels the policy.

Question 16

Reduced paid-up insurance means the policy continues for life at a reduced face amount.

Question 17

The face amount is the amount stated in the policy.

Question 18

Universal life provides whole life protection.

Question 19

Premiums for straight-life insurance are higher than premiums for term insurance.

Question 20

A 20-year endowment does not build up any cash value by the end of year 5.

Question 21

If the insured cancels a fire insurance policy after seven months, the refund will be (use table in handbook):

A)67%
B)7/12 of policy
C)5/12 of policy
D)33%
E)None of these

Question 22

The insurance required to meet coinsurance is:

A)80% × face value
B)80% × replacement value
C)80% × actual loss
D)Insurance carried divided by 80%
E)None of these

Question 23

Term insurance:

A)Is more expensive than straight life
B)Builds up cash value
C)Pays more than the face amount
D)Provides temporary protection
E)None of these

Question 24

All states have the same compulsory insurance.

Question 25

The actual amount of insurance carried is called the face value.

Question 26

Insurance required to meet coinsurance is the coinsurance rate times the replacement value.

Question 27

Collision and comprehensive:

A)Only pay the insurer
B)Only pay the insured
C)Are compulsory insurance
D)Have no deductibles
E)None of these

Question 28

10/20 of bodily injury means that an insurance company will pay up to $20,000 per person up to a total of 10 people for bodily injury.

Question 29

Which one of the following builds up no cash value?

A)Universal life
B)Straight life
C)Term
D)20-payment life
E)None of these

Question 30

As a result of coinsurance, the insurance company might pay more than face value.

Question 31

As a result of few suits as well as high operating costs, no-fault has reduced some premium costs.

Question 32

A falling object that dents a car would be covered under comprehensive insurance.

Question 33

No-fault insurance does not reduce premiums for collision, property damage, or comprehensive.

Question 34

The one named in the policy to receive the insurance proceeds in case of the death of the one taking out the policy is the:

A)Insured
B)Insurer
C)Beneficiary
D)Both insured and beneficiary
E)None of these

Question 35

An auto insurance premium may be partially based on:

A)Attitude of driver
B)Expected life of car
C)Make of car
D)Number of years one expects to drive a car
E)None of these

Question 36

Lowering deductibles for collision will result in increased premiums.

Question 37

In terms of premium cost, the most expensive type of insurance is:

A)Term
B)Straight life
C)20-payment life
D)20-year endowment
E)None of these

Question 38

A premium for fire insurance could be lower than someone else's if:

A)Building is wood
B)Roof is not fire resistant
C)Building is close to a fire hydrant
D)Goods within store are flammable
E)None of these

Question 39

Compulsory liability insurance includes bodily injury and property damage.

Question 40

Reduced paid-up insurance:

A)Buys protection with paying new premiums
B)Continues for 20 years
C)Results in a face amount less than the original amount
D)Means original face amount is continued for a certain number of years
E)None of these

Question 41

Match the following terms with their definitions.

-Endowment insurance

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 42

Match the following terms with their definitions.

-Cash value

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 43

Calculate the optional bodily injury cost for the following: Class 10; optional bodily Injury: 100/300/50

A)$94
B)$144
C)$108
D)$187
E)None of these

Question 44

Lee's toy store is worth $400,000 and is insured for $300,000. Assuming an 80% coinsurance clause and a fire that caused $190,000 of damage, the liability of the insurance company is:

A)$142,500
B)$124,500
C)$187,125
D)$178,125
E)None of these

Question 45

Match the following terms with their definitions.

-Insurer

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 46

Jay Miller insured his pizza shop for $200,000 for fire insurance at an annual rate per $100 of $.49. At the end of 10 months, Jay canceled the policy since his pizza shop went out of business. Using the table in the handbook, the refund to Jay is:

A)$980
B)$852.60
C)$127.40
D)$186.20
E)None of these

Question 47

Al Smith, who lives in Territory 5, carries 10/20/5 compulsory liability insurance along with optional collision that has a $300 deductible. Al, who was at fault in an accident, caused $4,000 damage to the other auto as well as $900 damage to his own car. Also, the courts awarded $15,000 and $7,000, respectively, to the two passengers in the other car for personal injuries. Al is responsible to pay a total of:

A)$5,000
B)$5,600
C)$600
D)$5,300
E)None of these

Question 48

Given the following information and using the tables in the handbook, the total annual premium is:
Class 17 operator Compulsory 10/20/5 Symbol 5
Age 4
Optional 100/300 bodily Collision $200 deductible Comprehensive $200 deductible

A)$615.00
B)$622.00
C)$578.00
D)$752.00
E)None of these

Question 49

The property of Lance's Garage is worth $90,000. Lance has a fire insurance policy of $40,000 that contains an 80% coinsurance clause. On a fire that causes $60,000 of damage, the insurance company pays:

A)$27,777.78
B)$27,777.87
C)$33,333.33
D)$33,330.00
E)None of these

Question 50

Howard Hane had taken out a $130,000 fire insurance policy for his new restaurant at a rate of $.82 per $100. Nine months later, Howard canceled the policy and decided to move his store to a new location. The cost of the premium to Howard is (use the table in the handbook):

A)$1,066
B)$863.46
C)$1,606
D)$836.64
E)None of these

Question 51

Bill Blum insured his hardware store with a fire insurance policy for $88,000 at a cost of $.84 per $100. Ten months later his insurance company canceled his policy as a result of failure to correct a fire hazard. The cost of the policy to Bill was:

A)$739.20
B)$793.20
C)$591.36
D)$616.00
E)None of these

Question 52

Match the following terms with their definitions.

-No-fault

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 53

Calculate the annual premium for life insurance by using the table lookup for: $$\begin{array} { l l } \text { Face Value: } & \$ 60,000 \\\text { Gender: } & \text { Female } \\\text { Type: } & \text { Straight-Life Policy } \\\text { Age } & 38\end{array}$$

A)$7,920
B)$787.20
C)$675.60
D)$600.00
E)None of these

Question 54

Abby Kaminsky, age 32, has decided to take out a limited payment life policy. She chose this since she expects her income to decline in future years. Abby has decided to take out a 20-year payment life policy with a coverage amount of $200,000. Using the tables in the handbook, her annual premium will be:

A)$1,158
B)$2,316
C)$2,136
D)$1,518
E)None of these

Question 55

Match the following terms with their definitions.

-Term insurance

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 56

Mia's office building with a $300,000 value has a rating of 2 with a building classification of A. The contents in the building are valued at $120,000. Using the tables in the handbook, the total annual premium is:

A)$1,046.40
B)$990.00
C)$1,064.40
D)$1,064.04
E)None of these

Question 57

Jim opened a new pizza shop. He insures his store for $90,000 for fire. What is his premium if the rate per $100 is $0.83?

A)$74.70
B)$74,700
C)$700
D)$747.00
E)None of these

Question 58

Matt Miller, age 28, takes out $50,000 of straight-life insurance. His annual premium is $418.20. At the end of 20 years, the cash value of his policy is (use the tables in the handbook):

A)$13,250
B)$26,000
C)$26,500
D)$30,000
E)None of these

Question 59

Maryville University purchased building insurance for a temporary bookstore for a total annual charge of $1,600. It closed the facility after five months. What is the refund?

A)$768
B)$976
C)$624
D)$832
E)None of these

Question 60

Ben's office building with $200,000 value has a rating area of 1 with a building class of B. The contents are valued at $90,000. Using the table lookup, what is the total annual premium for both?

A)$108.00
B)$486.00
C)$820.00
D)$1,306.00
E)None of these

Question 61

Match the following terms with their definitions.

-Short rate table

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 62

Match the following terms with their definitions.

-Coinsurance

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 63

Match the following terms with their definitions.

-Comprehensive

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 64

Match the following terms with their definitions.

-Comprehensive

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 65

Match the following terms with their definitions.

-Paid-up insurance

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 66

Complete the cost of the premium for fire insurance:
$$\begin{array} { | l | l | l | l | } \hline \text { Rate of Area } & \text { Class } & \text { Building } & \text { Contents } \\\hline 2 & \text { B } & \$ 80,000 & \$ 35,000 \\\hline\end{array}$$

Question 67

Round all answers to nearest cent (as appropriate).
LIFE INSURANCE
Use tables in handbook (for females subtract three years)Calculate annual premium:
$\begin{array}{|l|l|l|l|}\hline\text { Face Value } & \text { Age \& Sex of Insured } & \text { Type of Insurance } & \text { Annual Premium } \\\hline \$ 108,000 & 21 \mathrm{M} & 5 \text {-Year Term } & \mathbf{A} \\\hline \$ 40,000 & 42 \mathrm{~F} & \text { Straight Life } & \mathrm{B} \\\hline 90,000 & 22 \mathrm{M} & \text { - } 0 \text {-Pay Life } & \mathrm{C} \\\hline \$ 120,000 & 32 \mathrm{~F} & \text { Straight Life } & \mathrm{D} \\\hline\end{array}$
$\text { E. What is the cash value of policy in } D \text { at the end of } 10 \text { years? }$

Question 68

Match the following terms with their definitions.

-Nonforfeiture

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 69

Calculate the amount the insurance company will pay:
$$\begin{array} { | l | l | l | l | l | } \hline\begin{array} { l } \text { Value of } \\\text { Property }\end{array} & \begin{array} { l } \text { Amount of } \\\text { Insurance }\end{array} & \text { Policy } & \text { Actual Fire Loss } & \begin{array} { l } \text { Amount Insurance } \\\text { Company will pay }\end{array} \\\hline \$ 70,000 & \$ 40,000 & 80 \% \text { Co-Ins } & \$ 11,200 & \text { A } \\\$ 90,000 & \$ 50,000 & 80 \% \text { Co-Ins } & \$ 36,000 & \text { B } \\\hline\end{array}$$

Question 70

Match the following terms with their definitions.

-Insured

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 71

Match the following terms with their definitions.

-Beneficiary

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 72

Match the following terms with their definitions.

-Compulsory

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 73

Match the following terms with their definitions.

-Premium

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 74

Match the following terms with their definitions.

-Indemnity

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 75

Calculate cost and refund (use table in text if needed):
$$\begin{array} { | l | l | l | l | l | } \hline \text { Annual Premium } & \text { Canceled After } & \text { Canceled By } & \text { Premium Cost } & \text { Refund } \\\hline \$ 400 & 6 \text { Months } & \text { Insured } & \text { A } & \text { B } \\\hline \$ 800 & 9 \text { Months } & \text { Insurer } & \text { C } & \text { D } \\\hline\end{array}$$

Question 76

Using the tables in the handbook, calculate Joe Wheel's Auto premium:
Class 17 operator
Compulsory 10/20/5
Symbol 5
Age 4
Optional 100/300 bodily
Collision $300 deductible
Comprehensive $300 deductible
Damage to someone else's property 25M
Towing

Question 77

Match the following terms with their definitions.

-Deductible

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 78

Match the following terms with their definitions.

-Face amount

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 79

Match the following terms with their definitions.

-Straight life

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft

Question 80

Match the following terms with their definitions.

-Collision

A)Continual premium payments
B)Used when insured cancels
C)Blame doesn't matter in payoff
D)Periodic payment
E)Not optional
F)Combination of term and whole life
G)Result of a nonforfeiture value
H)Policyholder
I)Amount of insurance stated on the policy
J)Value of policy when terminated
K)Builds no cash value
L)Options when an insurance policy is terminated
M)One to receive face value of life insurance
N)Payment to insured from a loss
O)80%
P)Pay for repairs to one's auto
Q)Amount insured pays
R)The insurance company
S)Fire, theft