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Question 1 of 10
1. Question
What is this principle in insurance, wherein the insurer is entitled to recover from a negligent third party any loss payments made to the insured?
Correct
The principle of subrogation is defined as the substitution of the insurer in place of the insured to claim indemnity from a third party for a loss covered by insurance.
Incorrect
The principle of subrogation is defined as the substitution of the insurer in place of the insured to claim indemnity from a third party for a loss covered by insurance.
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Question 2 of 10
2. Question
What is this principle in insurance, wherein a higher degree of honesty is imposed on both parties to an insurance contract than is imposed on parties to other contracts?
Correct
The principle of utmost good faith is supported by three important legal doctrines:
(1) Representations are statements made by the applicant for insurance.
(2) Concealment is the intentional failure of the applicant for insurance to reveal a material fact to the insurer.
(3) A warranty is a statement that becomes part of the insurance contract and is guaranteed by the maker to be true in all respects.Incorrect
The principle of utmost good faith is supported by three important legal doctrines:
(1) Representations are statements made by the applicant for insurance.
(2) Concealment is the intentional failure of the applicant for insurance to reveal a material fact to the insurer.
(3) A warranty is a statement that becomes part of the insurance contract and is guaranteed by the maker to be true in all respects. -
Question 3 of 10
3. Question
What is this part of an insurance contract, which is defined as statements that provide information about the particular property or activity to be insured?
Correct
Information contained in the sections of the declaration is used for underwriting and rating purposes and for identifying the property or activity to be insured. The declarations section usually can be found on the first page of the policy or a policy insert.
Incorrect
Information contained in the sections of the declaration is used for underwriting and rating purposes and for identifying the property or activity to be insured. The declarations section usually can be found on the first page of the policy or a policy insert.
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Question 4 of 10
4. Question
A deductible is a common policy provision by which a specified amount is subtracted from the tool loss payment that otherwise would be payable. Which of the following are purposes of deductible in a policy?
I. To eliminate big claims
II. To reduce premiums
III. To increase premiums
IV. To reduce moral hazard and attitudinal hazardCorrect
Deductibles have several important purposes. They include the following:
(1) A deductible eliminates small claims that are expensive to handle and process.
(2) Deductibles are also used to reduce premiums paid by the insured.
(3) Finally, deductibles are used by insurers to reduce both moral hazard and attitudinal hazard.Incorrect
Deductibles have several important purposes. They include the following:
(1) A deductible eliminates small claims that are expensive to handle and process.
(2) Deductibles are also used to reduce premiums paid by the insured.
(3) Finally, deductibles are used by insurers to reduce both moral hazard and attitudinal hazard. -
Question 5 of 10
5. Question
What is this provision in health insurance, which requires the insured to pay a specified percentage of covered medical expenses over the deductible?
Correct
The purposes of coinsurance in health insurance are:
(1) To reduce premiums
(2) To prevent overutilization of policy benefits
Because the insured pays part of the cost, premiums are reduced. Also, the patient will not demand the most expensive medical services if he or she pays part of the cost.Incorrect
The purposes of coinsurance in health insurance are:
(1) To reduce premiums
(2) To prevent overutilization of policy benefits
Because the insured pays part of the cost, premiums are reduced. Also, the patient will not demand the most expensive medical services if he or she pays part of the cost. -
Question 6 of 10
6. Question
What is this type of defined-benefit plan, wherein benefits are defined in terms of a hypothetical account balance, and actual retirement benefits will depend on the value of the participant’s account at retirement?
Correct
In a typical cash-balance plan, the employer established hypothetical accounts for plan participants. The accounts are hypothetical because the contributions and interest credits are bookkeeping credits. Actual contributions are not allocated to the participant’s accounts, and the accounts do not reflect actual investment gains or losses. The investment credits are also hypothetical and are based on an interest rate stated in the plan or on some external index.
Incorrect
In a typical cash-balance plan, the employer established hypothetical accounts for plan participants. The accounts are hypothetical because the contributions and interest credits are bookkeeping credits. Actual contributions are not allocated to the participant’s accounts, and the accounts do not reflect actual investment gains or losses. The investment credits are also hypothetical and are based on an interest rate stated in the plan or on some external index.
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Question 7 of 10
7. Question
Social Security was enacted into law as a result of the Social Security Act of 1935. What occupations are covered under the Social Security program?
I. All private-sectors employees
II. All government employees
III. Federal civilian employees hired after 1983
IV. Private sector employees can be covered by a voluntary agreementCorrect
All private-sector employees are covered under Social Security at present. Federal civilian employees hired after 1983 are also covered on a compulsory basis. Also, state and local government employees can be covered by a voluntary agreement between the state and the federal government.
Incorrect
All private-sector employees are covered under Social Security at present. Federal civilian employees hired after 1983 are also covered on a compulsory basis. Also, state and local government employees can be covered by a voluntary agreement between the state and the federal government.
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Question 8 of 10
8. Question
What is this type of legal defense against negligence, which means that if the injured person’s conduct falls below the standard of care required for his or her protection, and such conduct contributed to the injury, the injured person cannot collect damages?
Correct
An example of contributory negligence is if a motorist on an expressway suddenly slows down without signaling and is rear-ended by another driver, the failure to signal could constitute contributory negligence. The first motorist cannot collect damages for injuries if contributory negligence is established.
Incorrect
An example of contributory negligence is if a motorist on an expressway suddenly slows down without signaling and is rear-ended by another driver, the failure to signal could constitute contributory negligence. The first motorist cannot collect damages for injuries if contributory negligence is established.
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Question 9 of 10
9. Question
Some drivers have difficulty obtaining auto insurance through normal market channels. This group includes young drivers who account for a disproportionate number of auto accidents, drivers with poor driving records, and drivers with one or more convictions for drunk driving. Which of the following auto insurances are available to high-risk drivers?
I. Automobile Insurance Plan
II. No-Fault Auto Insurance
III. Maryland Automobile Insurance
IV. Low-Cost Auto InsuranceCorrect
High-risk drivers who have difficulty in obtaining auto insurance in the standard markets can purchase insurance from several sources, including the following:
(1) Automobile Insurance Plan
(2) Joint Underwriting Association (JUA)
(3) Reinsurance Facility
(4) Maryland Automobile Insurance
(5) Specialty InsurersIncorrect
High-risk drivers who have difficulty in obtaining auto insurance in the standard markets can purchase insurance from several sources, including the following:
(1) Automobile Insurance Plan
(2) Joint Underwriting Association (JUA)
(3) Reinsurance Facility
(4) Maryland Automobile Insurance
(5) Specialty Insurers -
Question 10 of 10
10. Question
A good student discount can reduce auto insurance premiums. The cost reduction is based on the premise that good students are better drivers; the psychological makeup and intellectual capacity of superior students also contribute to the safer operation of an auto. What are the eligibility requirements for a good student discount?
I. The individual must be a full-time or part-time student in high school or college
II. Must be at least 18 years old
III. Must rank in the upper 20 percent of the class
IV. Must have a B or better average, or the equivalentCorrect
To qualify for the good student discount, typically the individual must be a full-time student in high school or college, be at least 16, and meet one of the following:
(1) Rank in the upper 20 percent of the class
(2) Have a B or better average, or the equivalent
(3) Have at least a 3.0 average
(4) Be on the dean’s list or honor roll
A school official must sign a form indicating that the student has met one of the scholastic requirements.Incorrect
To qualify for the good student discount, typically the individual must be a full-time student in high school or college, be at least 16, and meet one of the following:
(1) Rank in the upper 20 percent of the class
(2) Have a B or better average, or the equivalent
(3) Have at least a 3.0 average
(4) Be on the dean’s list or honor roll
A school official must sign a form indicating that the student has met one of the scholastic requirements.