Question 1

Universal life insurance is the same thing as whole life insurance.

Accepted Answer

Universal life insurance and whole life insurance are similar in that they are both types of permanent life insurance, but they have some key differences in how premiums, death benefits, and cash values are structured. Universal life insurance allows more flexibility in the timing and amount of premium payments and may offer adjustable death benefits and cash values based on market performance.

Question 2

Disability insurance is important because the average person is seven times more likely to be disabled for at least 90 days than to die before age 65.

Accepted Answer

This is a commonly cited statistic in the insurance industry and highlights the importance of having disability insurance to protect against the financial consequences of a long-term disability.

Question 3

Bob issued a "binder" on behalf of his company,All Faith Insurance Co.,to Ian to insure his house.This binder constitutes final acceptance of Ian's application.

Accepted Answer

A binder is a temporary insurance contract that provides coverage until a formal policy is issued. It does not constitute final acceptance of the application.

Question 4

April purchased a life insurance policy on herself.On her death,the proceeds of the insurance were to be paid to her minor child,Ryan.Ryan is the beneficiary.

Accepted Answer

The statement describes a valid scenario for a life insurance policy with a minor child named as the beneficiary.

Question 5

Insurance obtained by a limited partnership on the life of the general partner would be:

Accepted Answer

Insurance obtained by a limited partnership on the life of the general partner would be key-person insurance because the general partner is a key person contributing a great deal to making the business successful. This type of insurance is designed to compensate the business for financial losses that would occur if the key person were to die or become disabled.

Question 6

Term life insurance premiums are paid only for a certain length of time,or "term' but the coverage lasts for the insured's entire life.

Accepted Answer

Term life insurance provides coverage only for a specific period of time, typically 10-30 years. Once the term is over, the coverage expires and the policyholder has to either renew it or purchase a new policy.

Question 7

The owner,the insured and the beneficiary are all the same person in an insurance contract.

Accepted Answer

In an insurance contract, the owner, insured, and beneficiary can be the same person, but they can also be different individuals. The owner is the person who holds the policy, the insured is the person whose life or property is covered, and the beneficiary is the person who receives the benefit.

Question 8

Which of the following is generally covered under casualty insurance?

Accepted Answer

Generally, casualty insurance covers damage or loss to property as a result of unexpected or sudden events such as vandalism, theft, or natural disasters. Employee theft or embezzlement is covered under fidelity insurance, and disability is covered under disability insurance. Transportation insurance is a separate type of insurance that covers damage or loss that occurs during transportation of goods.

Question 9

Victor purchased $1 million of insurance on his home even though the house was only worth $500,000.Victor's house was destroyed by lightning.Under the insurance policy,Victor will be able to recover $1 million.

Accepted Answer

Insurance policies typically pay out based on the actual cash value or the replacement cost of the property at the time of loss, not the amount of insurance purchased, to prevent profiting from a claim.

Question 10

Sarah has car insurance.While driving her automobile,Sarah negligently ran a red light and hit Vi's car.Which type of coverage will pay for the damage done to Vi's car?

Accepted Answer

Liability insurance is the type of coverage that pays for damages caused to another person's property or bodily injury as a result of the policyholder's negligence. In this scenario, Sarah's liability insurance will cover the damages to Vi's car. Comprehensive insurance covers damage to the policyholder's own car caused by events such as theft, vandalism, or natural disasters. Collision insurance covers damage to the policyholder's own car in the event of a collision, while uninsured motorist insurance covers damages caused by a driver who is uninsured or underinsured.

Question 11

A person always has an insurable interest in his own life.

Accepted Answer

This is because the person will suffer financial loss or hardship in the event of their own death, and therefore has a financial interest in ensuring that they have adequate life insurance coverage.

Question 12

Abraham has just purchased his first car.His bank,First State Bank,loaned him the money to buy the car and has required him to purchase insurance to protect the car as the collateral for the loan.Which basic types of coverage should Abraham buy to satisfy the bank requirement and to protect himself from the risks of operating an automobile?

Accepted Answer

Collision coverage protects Abraham's car if he is responsible for an accident. Comprehensive coverage covers damages caused by events other than an accident, such as theft or weather damage. Uninsured motorist coverage will protect Abraham if he is in an accident with a driver who does not have insurance. Liability insurance is required by law and covers damages and injuries that Abraham may cause to others while operating his car. All of these types of coverage will satisfy the bank's requirement and protect Abraham from the risks of operating an automobile.

Question 13

Insurance contracts are not required to be in writing because they can be fulfilled in less than one year but some states require they be in writing.

Accepted Answer

Insurance contracts are required to be in writing in some states, even if they can be fulfilled in less than one year.

Question 14

In purchasing life insurance,Kelsey concealed the fact that she has a muscular disease.The insurance company can void the policy if the muscular disease is found to be a material fact.

Accepted Answer

Concealing a material fact such as a pre-existing medical condition can result in the insurance company voiding the policy.

Question 15

Jose and Juanita are first cousins.Jose lives in San Francisco,California; Juanita lives in Toronto,Canada.The two have met only once in life,and may never meet again.Nonetheless,because they are blood relatives,Juanita has an insurable interest in Jose's life.

Accepted Answer

The answer of Jose and Juanita are first cousins.Jose lives...

Question 16

An insurance policy must meet all the common law requirements for a contract.

Accepted Answer

An insurance policy is a contract between the insurer and the insured, and as such, it must meet all the common law requirements for a contract, including offer, acceptance, consideration, legal capacity, and mutual agreement.

Question 17

Crown Bakeries,Inc.has an insurable interest in Brian,its head pastry chef.

Accepted Answer

Crown Bakeries, Inc. would have an insurable interest in Brian as he is a valuable asset to the company due to his position as head pastry chef.

Question 18

The simplest,cheapest life insurance option is whole or straight life.

Accepted Answer

Whole or straight life insurance is typically more expensive than other types of life insurance such as term life insurance. It also provides a permanent death benefit rather than a set term, making it a more complex and costly option.

Question 19

A lie on an insurance application will make the policy void even if the lie does not relate to the actual loss insured against.

Accepted Answer

Insurance policies are based on the principle of utmost good faith, which means that the policyholder must disclose all relevant information to the insurer. If the policyholder lies on the insurance application, it is a breach of this principle and can result in the policy being voided. This applies even if the lie does not relate to the actual loss insured against.

Question 20

An insurance policy must meet which of the following?

Accepted Answer

The answer of An insurance policy must meet which of...

Quiz 32: Insurance