Question 1

Exclusions exist to limit coverage of nonfortuitous events.

Accepted Answer

A) True 
 B)False  True

Question 2

To buy an insurance contract, the insured is required to make a(n) _____, which is an offer to buy insurance.

Accepted Answer

application

Question 3

Which of the following sections is generally the first part of the insurance policy?

Accepted Answer

A) Conditions 
B) Endorsements and riders 
C) Exclusions 
D) Declarations 
E) Insuring agreement 
A) Conditions 
B) Endorsements and riders 
C) Exclusions 
D) Declarations 
E) Insuring agreement D

Question 4

Identify the losses that occur when an organization is unable to sell its goods or services, and/or unable to produce goods for sale because of direct or indirect loss.

Accepted Answer

A) Accidental losses 
B) Punitive losses 
C) Business interruption losses 
D) Extra expense losses 
E) Preventative losses 
A) Accidental losses 
B) Punitive losses 
C) Business interruption losses 
D) Extra expense losses 
E) Preventative losses

Question 5

Distinguish between direct and indirect loss.

Accepted Answer

Direct loss to property is the value tha

Question 6

This section of the insurance contract enumerates the duties of the parties to the contract and, in some cases, defines the terms used.Identify this element of the insurance contract.

Accepted Answer

A) Conditions 
B) Endorsements and riders 
C) Exclusions 
D) Declarations 
E) Insuring clauses 
A) Conditions 
B) Endorsements and riders 
C) Exclusions 
D) Declarations 
E) Insuring clauses

Question 7

Nonphysical injury to a person, including damage caused by libel, slander, and false imprisonment are examples of:

Accepted Answer

A) bodily injury. 
B) punitive damages. 
C) facultative damages. 
D) contingent damages. 
E) personal injury. 
A) bodily injury. 
B) punitive damages. 
C) facultative damages. 
D) contingent damages. 
E) personal injury.

Question 8

Riders are used with life/health policies, whereas endorsements are used with property/casualty policies.

Accepted Answer

A) True 
 B)False

Question 9

When an insurance policy is suspended, the effect is only temporary.

Accepted Answer

A) True 
 B)False

Question 10

Differentiate between conditional and binding receipts.

Accepted Answer

Conditional and binding receipts in life

Question 11

Identify the element of the insurance contract that is a general statement of the promises the insurer makes to the insured.

Accepted Answer

A) Conditions 
B) Endorsements and riders 
C) Exclusions 
D) Declarations 
E) Insuring clauses 
A) Conditions 
B) Endorsements and riders 
C) Exclusions 
D) Declarations 
E) Insuring clauses

Question 12

Which of the following benefits the insured when losses are predictable and manageable?

Accepted Answer

A) Loss avoidance 
B) Loss forecasting 
C) Loss retention 
D) Loss transfer 
E) Loss backcasting 
A) Loss avoidance 
B) Loss forecasting 
C) Loss retention 
D) Loss transfer 
E) Loss backcasting

Question 13

The insuring agreement provides a general description of the circumstances under which the policy becomes applicable.The circumstances include the covered loss-causing events, called:

Accepted Answer

A) exposures. 
B) perils 
C) moral hazard. 
D) adverse selection. 
E) morale hazard. 
A) exposures. 
B) perils 
C) moral hazard. 
D) adverse selection. 
E) morale hazard.

Question 14

Health insurance policies often are written on an open-perils basis.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true about periods of coverage and limitations of liability?

Accepted Answer

A) Life insurance policies promise to pay a specified amount for total expenses during one's lifetime. 
B) Health policies typically limit payment to the face amount of the policy. 
C) Term life policies often provide coverage for the entire life of the insured. 
D) Perpetual policies remain in force until canceled by the insured or the insurer. 
E) Liability policies provide coverage up until a specified age. 
A) Life insurance policies promise to pay a specified amount for total expenses during one's lifetime. 
B) Health policies typically limit payment to the face amount of the policy. 
C) Term life policies often provide coverage for the entire life of the insured. 
D) Perpetual policies remain in force until canceled by the insured or the insurer. 
E) Liability policies provide coverage up until a specified age.

Question 16

A(n) _____ policy covers only losses caused by the perils listed in the policy.

Accepted Answer

The answer of A(n) _____ policy covers only losses caused...

Question 17

Some organizations choose to continue operating following property damage, but they are able to do so only by incurring additional costs known as:

Accepted Answer

A) preventative losses. 
B) dependent losses. 
C) contingent business interruption losses. 
D) extra expense losses. 
E) facultative losses. 
A) preventative losses. 
B) dependent losses. 
C) contingent business interruption losses. 
D) extra expense losses. 
E) facultative losses.

Question 18

Which of the following are damages assessed against defendants for gross negligence, supposedly for the purpose of punishment and to deter others from acting in a similar fashion?

Accepted Answer

A) Contingent damages 
B) Bodily damages 
C) Punitive damages 
D) Facultative damages 
E) Personal damages 
A) Contingent damages 
B) Bodily damages 
C) Punitive damages 
D) Facultative damages 
E) Personal damages

Question 19

An open-perils policy provides broader coverage than a named-perils policy.

Accepted Answer

A) True 
 B)False

Question 20

A waiver of premium rider increases the benefits of a life insurance policy by:

Accepted Answer

A) providing for continued coverage without continued payment of premiums after a specific age. 
B) providing for continued coverage without continued payment of premiums if the insured becomes totally disabled. 
C) paying the face value to the insured before his or her death, after the premium payment period is over. 
D) providing for continued coverage without payment of premiums in case of certain conditions. 
E) insuring a few exposures that are normally not insured in a life insurance policy. 
A) providing for continued coverage without continued payment of premiums after a specific age. 
B) providing for continued coverage without continued payment of premiums if the insured becomes totally disabled. 
C) paying the face value to the insured before his or her death, after the premium payment period is over. 
D) providing for continued coverage without payment of premiums in case of certain conditions. 
E) insuring a few exposures that are normally not insured in a life insurance policy.

Exam 10: Structure and Analysis of Insurance Contracts

Exclusions exist to limit coverage of nonfortuitous events.

To buy an insurance contract, the insured is required to make a(n) _____, which is an offer to buy insurance.

Which of the following sections is generally the first part of the insurance policy?

Identify the losses that occur when an organization is unable to sell its goods or services, and/or unable to produce goods for sale because of direct or indirect loss.

Distinguish between direct and indirect loss.

This section of the insurance contract enumerates the duties of the parties to the contract and, in some cases, defines the terms used.Identify this element of the insurance contract.

Nonphysical injury to a person, including damage caused by libel, slander, and false imprisonment are examples of:

Riders are used with life/health policies, whereas endorsements are used with property/casualty policies.

When an insurance policy is suspended, the effect is only temporary.

Differentiate between conditional and binding receipts.

Identify the element of the insurance contract that is a general statement of the promises the insurer makes to the insured.

Which of the following benefits the insured when losses are predictable and manageable?

The insuring agreement provides a general description of the circumstances under which the policy becomes applicable.The circumstances include the covered loss-causing events, called:

Health insurance policies often are written on an open-perils basis.

Which of the following statements is true about periods of coverage and limitations of liability?

A(n) _____ policy covers only losses caused by the perils listed in the policy.

Some organizations choose to continue operating following property damage, but they are able to do so only by incurring additional costs known as:

Which of the following are damages assessed against defendants for gross negligence, supposedly for the purpose of punishment and to deter others from acting in a similar fashion?

An open-perils policy provides broader coverage than a named-perils policy.

A waiver of premium rider increases the benefits of a life insurance policy by:

The Nature of Risk: Losses and Opportunities

Risk Measurement and Metrics

Risk Attitudes: Expected Utility Theory and Demand for Hedging

Evolving Risk Management: Fundamental Tools

The Evolution of Risk Management: Enterprise Risk Management

The Insurance Solution and Institutions

Insurance Operations

Insurance Markets and Regulation

Fundamental Doctrines Affecting Insurance Contracts

Property Risk Management

The Liability Risk Management

Multirisk Management Contracts: Homeowners

Multirisk Management Contracts: Auto

Multirisk Management Contracts: Business

Risks Related to the Job: Workers Compensation and Unemployment Compensation

Life Cycle Financial Risks

Social Security

Mortality Risk Management: Individual Life Insurance and Group Life Insurance

Employment-Based Risk Management General

Employment-Based and Individual Longevity Risk Management

Employment and Individual Health Risk Management

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