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Question 1 of 10
1. Question
What is this type of watercraft insurance, which provides physical damage insurance on the boat on a direct physical loss or an open perils basis?
Correct
A boatowner’s package policy combines physical damage insurance on the boat, medical expense insurance, liability insurance, and other coverages into one policy. Although the package policies are not uniform, they have certain common characteristics.
Incorrect
A boatowner’s package policy combines physical damage insurance on the boat, medical expense insurance, liability insurance, and other coverages into one policy. Although the package policies are not uniform, they have certain common characteristics.
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Question 2 of 10
2. Question
What is this type of insurance, which covers damages arising from the failure of a data holder to protect private information from being accessed by an authorized party?
Correct
Cyber liability insurance is relatively new; hence, there are no standard coverages available. Two coverage approaches are currently being used. Some insurers are offering stand-alone cyber liability insurance forms. A second approach is to purchase a cyber liability endorsement that can be added to a business owner’s policy or a policy packaging management liability coverages.
Incorrect
Cyber liability insurance is relatively new; hence, there are no standard coverages available. Two coverage approaches are currently being used. Some insurers are offering stand-alone cyber liability insurance forms. A second approach is to purchase a cyber liability endorsement that can be added to a business owner’s policy or a policy packaging management liability coverages.
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Question 3 of 10
3. Question
The Dodd-Frank Act created the Federal Insurance Office (FIO), which will have a significant impact on insurance regulation. What authority does the FIO have?
I. Monitor all aspects of the insurance industry
II. Identify gaps in insurance regulation and identify issues that contribute to systemic risk
III. Assist the FSOC in identifying insurers that could create systemic risk
IV. Represent insurance companies in international negotiationsCorrect
The Federal Insurance Office has the authority to:
(1) Monitor all aspects of the insurance industry.
(2) Identify gaps in insurance regulation and identify issues that contribute to systemic risk.
(3) Assist the FSOC in identifying insurers that could create systemic risk.
(4) Represent the federal government in international discussions dealing with insurance regulation.
(5) Negotiate international agreements with foreign countries that pertain to insurance regulation.Incorrect
The Federal Insurance Office has the authority to:
(1) Monitor all aspects of the insurance industry.
(2) Identify gaps in insurance regulation and identify issues that contribute to systemic risk.
(3) Assist the FSOC in identifying insurers that could create systemic risk.
(4) Represent the federal government in international discussions dealing with insurance regulation.
(5) Negotiate international agreements with foreign countries that pertain to insurance regulation. -
Question 4 of 10
4. Question
The interest-adjusted cost method developed by the National Association of Insurance Commissioners is a more accurate measure of life insurance costs. Under this method, the time value of money is taken into consideration by applying an interest factor to each element of the cost calculation. What are the principal types of interest-adjusted cost indexes?
I. Surrender cost index
II. Fixed interest index
III. Net payment cost index
IV. Gross payment cost indexCorrect
There are two principal types of interest-adjusted cost indexes:
(1) The surrender cost index is useful if you believe that you may surrender the policy at the end of 10 or 20 years or some other period.
(2) The net payment cost index is useful if you intend to keep your policy in force, and cash values are of secondary importance to you.Incorrect
There are two principal types of interest-adjusted cost indexes:
(1) The surrender cost index is useful if you believe that you may surrender the policy at the end of 10 or 20 years or some other period.
(2) The net payment cost index is useful if you intend to keep your policy in force, and cash values are of secondary importance to you. -
Question 5 of 10
5. Question
The net single premium (NSP) is defined as the present value of the future death benefit. What are the three basic assumptions of NSP?
I. Premiums are paid at the end of the policy year
II. Death claims are paid at the end of the policy year
III. The death rate is uniform throughout the year
IV. Death claims are paid at the end of the coverage periodCorrect
The net single premium is based on three basic assumptions:
(1) Premiums are paid at the beginning of the policy year.
(2) Death claims are paid at the end of the policy year.
(3) The death rate is uniform throughout the year.Incorrect
The net single premium is based on three basic assumptions:
(1) Premiums are paid at the beginning of the policy year.
(2) Death claims are paid at the end of the policy year.
(3) The death rate is uniform throughout the year. -
Question 6 of 10
6. Question
What is this type of reserve, which represents the net premiums collected by the insurer for a particular block of policies, plus interest earnings at an assumed rate, less the assumed death claims paid out?
Correct
The retrospective reserve is the excess of the net premiums accumulated at interest over the death benefits paid out.
Incorrect
The retrospective reserve is the excess of the net premiums accumulated at interest over the death benefits paid out.
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Question 7 of 10
7. Question
What is this type of annuity, which is defined as an annuity written on the lives of two or more people, and the income payments terminate when the death of the first covered person dies?
Correct
Under a joint-life annuity, income payment terminates upon the death of the first covered life, and the surviving annuitants may still have a critical need for income.
Incorrect
Under a joint-life annuity, income payment terminates upon the death of the first covered life, and the surviving annuitants may still have a critical need for income.
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Question 8 of 10
8. Question
A variable annuity pays a lifetime income, but the income payments vary depending on the investment experience of the accounts in which premiums are invested. What are the basic characteristics of a variable annuity?
I. Premiums are invested in a portfolio of common stocks or other investments that presumably will increase in value during a period of inflation
II. Premiums increase the benefits manually and provide some protection against inflation
III. The annuity owner has considerable flexibility in the payment of premiums
IV. The premiums are used to purchase accumulation units during the period before retirement, and the value of each accumulation unit varies depending on common stock pricesCorrect
The fundamental purpose of a variable annuity is to provide an inflation hedge by maintaining the real purchasing power of the periodic payments during retirement.
The basic characteristics of a variable annuity include the following:
(1) Premiums are invested in a portfolio of common stocks or other investments that presumably will increase in value during a period of inflation.
(2) The premiums are used to purchase accumulation units during the period before retirement, and the value of each accumulation unit varies depending on common stock prices.Incorrect
The fundamental purpose of a variable annuity is to provide an inflation hedge by maintaining the real purchasing power of the periodic payments during retirement.
The basic characteristics of a variable annuity include the following:
(1) Premiums are invested in a portfolio of common stocks or other investments that presumably will increase in value during a period of inflation.
(2) The premiums are used to purchase accumulation units during the period before retirement, and the value of each accumulation unit varies depending on common stock prices. -
Question 9 of 10
9. Question
What is this type of individual health insurance, which provides periodic income payments when the insured is unable to work because of sickness or injury?
Correct
Under disability-income insurance, the amount of insurance you can buy is related to your earnings. To prevent over-insurance and to reduce moral hazard and malingering, insurers limit the amount of insurance sold to no more than 60 to 70 percent of gross earnings.
Incorrect
Under disability-income insurance, the amount of insurance you can buy is related to your earnings. To prevent over-insurance and to reduce moral hazard and malingering, insurers limit the amount of insurance sold to no more than 60 to 70 percent of gross earnings.
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Question 10 of 10
10. Question
Group life insurance plans are important areas of coverage for employees. What are the characteristics of a group life insurance plan?
I. A distinct characteristic is the coverage of many persons under one contract
II. A second characteristic is that group insurance usually cost more than comparable insurance purchased individually
III. A third characteristic is that individual evidence of insurability is required
IV. Finally, experience rating is used in group insurance plansCorrect
Group life insurance plans differ from individual insurance in several aspects:
(1) A distinct characteristic is the coverage of many persons under one contract.
(2) A second characteristic is that group insurance usually costs less than comparable insurance purchased individually.
(3) A third characteristic is that individual evidence of insurability is usually not required.
(4) Finally, experience rating is used in group insurance plans.Incorrect
Group life insurance plans differ from individual insurance in several aspects:
(1) A distinct characteristic is the coverage of many persons under one contract.
(2) A second characteristic is that group insurance usually costs less than comparable insurance purchased individually.
(3) A third characteristic is that individual evidence of insurability is usually not required.
(4) Finally, experience rating is used in group insurance plans.