Deck 19: Insurance

Question 1

A liability insurance policy can be subrogated, but cannot be assigned unless permission of the insurer is obtained.

Answer 1

True

Question 2

Which of the following is one of the main characteristics of a whole-life insurance policy?

A) It furnishes protection for a limited number of years.
B) Nothing is paid in case of survival.
C) It provides insurance protection over one's entire lifetime.
D) It terminates with no maturity value.
E) The face amount of the policy is payable only if the insured's death occurs during the stipulated term.

Answer 2

C

Question 3

Sally visited the Villa Insurance Co. in order to insure her house against fire. She has to pay a sum of $100 a month to insure her house for a year, in order to seek benefits of up to $20,000 during the year against any fire that takes place in her house. The monthly payment that Sally is supposed to pay is known as the:

A) rent.
B) perils.
C) premium.
D) insurance fee.
E) sum assured.

Answer 3

C

Question 4

To purchase property insurance, the would-be insured must have an interest in the property such that he would suffer a loss if the property were damaged.

Question 5

Property insurance is a part of automobile policies covering damage to the car caused by accident or by other events such as vandalism or fire.

Question 6

The no-fault system dispenses with the costly and uncertain tort system of having to prove negligence in the court in case of an automobile accident.

Question 7

Under property insurance, comprehensive coverage is the broadest form of coverage, and generally covers all perils including floods, earthquakes, and war.

Question 8

Ted takes a life insurance policy for a period of 20 years. The policy pays a death benefit of $250,000 to his spouse if Ted dies within those 20 years. Ted is said to have taken a _____ life insurance.

A) term
B) whole
C) health
D) straight
E) permanent

Question 9

Unlike property insurance, life insurance does not permit subrogation.

Question 10

The 'beneficiaries' of a life insurance policy are those who:

A) reimburse the sum assured.
B) pay the premiums.
C) buy the policy.
D) issue the policy.
E) are protected by the policy.

Question 11

In order to obtain a claim under insurance, the injury must result from an accident, not deliberate causes.

Question 12

Business interruption insurance covers the loss occurring from strikes.

Question 13

In a contract of reimbursement, the _____ is a person who promises to reimburse.

A) grantor
B) insurer
C) executor
D) testator
E) administrator

Question 14

Jane took out a term life insurance policy on her husband, Jack. During the term, Jack went insane and committed suicide. Since the policy was payable to Jane's estate, the insurer need not pay out the policy.

Question 15

Insurance premiums are lower for those disability insurance policies that have longer waiting periods.

Question 16

If a life insurance policy permits beneficiaries to be changed, then the original beneficiary will have a priority over the assignee to collect the sum assured.

Question 17

The insurance carrier's right to contest insurability after a certain number of years of premium payments on the policy is limited by the incontestable clause.

Question 18

One of the major criticisms of no-fault insurance is that it fails to deter unsafe conduct that causes accidents.

Question 19

Under term insurance, the insured would receive the sum assured if he survives for the term stated in the policy.

Question 20

In inflationary times, the owner of a homeowner's insurance policy must lower the policy's insured amount in order to profitably adjust for inflation.

Question 21

Professionals such as doctors, lawyers, and accountants often purchase _____ insurance to protect themselves against claims made by disgruntled patients or clients.

A) disability
B) health
C) term
D) malpractice
E) whole-life

Question 22

The manager of Bring Life Inc. took out insurance policies in the names of each of his employees. The policies will cover 100 percent of the costs of their being hospitalized and 80 percent of the charges for medicine and a doctor's services. The manager is said to have taken _____ insurance policies for his employees.

A) whole life
B) term
C) disability
D) health
E) homeowner

Question 23

List atleast five types of insurance for the individual and for the business.

Question 24

The _____ clause is a provision in a life insurance policy that prevents the insurer from avoiding or revoking the coverage after a certain number of years of premium payments on the policy, even if the insured committed fraud in applying for the policy.

A) concealment
B) subrogation
C) no-fault
D) incontestable
E) insurable interest

Question 25

James, a landlord, was negligent in repairing the broken step. Lily, the tenant, tripped and broke her ankle. She sued James for his negligence and demanded a sum of $10,000. Which of the following types of insurance would have covered the risk for James?

A) Homeowner's insurance
B) Property insurance
C) Disability insurance
D) Health insurance
E) Liability insurance

Question 26

Jared lost his job after his colleague Ron tarnished his reputation in the office. Jared subsequently sues Ron for this. Which of the following insurance policies would have covered such a risk for Ron?

A) Health insurance policy
B) Homeowner's insurance policy
C) Disability insurance policy
D) Personal liability insurance policy
E) Whole-life insurance policy

Question 27

An) _____ clause states that full payment of damages to buildings under the homeowner's policy will be made only if insurance equal to 80 percent of the replacement cost of the building is carried at the time of the loss.

A) coinsurance
B) subrogation
C) assignment
D) reinsurance
E) increased premium

Question 28

In the case of life insurance taken on someone else's life, who must have an insurable interest in the subject matter?

A) the beneficiary
B) the grantor
C) the assured
D) the insurer
E) the insured

Question 29

Differentiate between representation and concealment.

Question 30

An) _____ is a statement made by someone seeking an insurance policy.

A) policy
B) representation
C) assignment
D) testimonial
E) clause

Question 31

When applying for life insurance, Merlin is asked if she has been treated for any illness in the past five years, to which her answer is 'no'. However, she does not inform the insurer that she has experienced chest pains recently, for which she has not sought any medical treatment. In this case, the insurer may prove a case of _____ and avoid the insurance policy.

A) wagering
B) concealment
C) assignment
D) subrogation
E) no-fault

Question 32

_____ is the failure of an insured to set forth all the material facts in applying for insurance.

A) Perversion
B) Subrogation
C) Concealment
D) Falsification
E) Reinstatement