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RMI Practice Quizzes questions well

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In which part of an insurance contract would you find information about the property or activity to be insured? - correct answer ✔✔Declarations Deductibles are used for all of the following reasons - correct answer ✔✔- to reduce moral and attitudinal hazard

• to eliminate small claims
• to reduce premiums Deductibles are used for all of the following reasons except - correct answer ✔✔to reduce loss control efforts Which of the following statements is (are) true with respect to endorsements and riders? I. Endorsements and riders are used to amend provisions of insurance contracts. II. If the endorsement or rider conflicts with terms in the underlying contract, the endorsement or rider takes precedence unless it conflicts with the law. - correct answer ✔✔Both I and II Janice insured a building valued at $200,000 for $150,000 under a property insurance policy that included an 80 percent coinsurance provision. If a $32,000 insured loss occurs, how much will Janice collect from her insurer, assuming no deductible? - correct answer ✔✔$30, Disability income insurance uses a special type of deductible. No benefits are paid during the initial period of disability (e.g. two weeks, a month, five months, etc.). What is this type of deductible, which is expressed in time rather than in dollars, called? - correct answer ✔✔elimination (waiting) period In which section of an insurance contract will you find provisions that qualify or place limitations on the insurer's promise to perform? - correct answer ✔✔conditions

Which of the following statements is (are) true about the insuring agreement?I. The insuring agreement provides a description of the property or activity to be insured. II. The insuring agreement can be written on an "open-perils" basis or on a "named-perils" basis. - correct answer ✔✔II only Exclusions are found in insurance policies for all of the following reasons - correct answer ✔✔- some perils are not insurable

• moral hazard problems would develop without certain exclusions
• coverage may be provided under another insurance contract Exclusions are found in insurance policies for all of the following reasons EXCEPT - correct answer ✔✔to add coverage for certain perils 1 / 1 pts Bill borrowed Linda's car with her permission. Both Bill and Linda have automobile liability insurance with a $100,000 bodily injury liability limit. While driving Linda's car, Bill negligently caused an accident. The accident victim was awarded $80,000 in damages. How will this claim be settled, assuming that the policy written by Linda's insurer is primary and Bill's insurance coverage is excess? - correct answer ✔✔Linda's insurer will pay the entire $80,000 claim Dale and his wife Jenny are legally separated. The couple owns a vacation cabin. Dale purchased a $25,000 property insurance policy on the cabin. Unaware that Dale had purchased this coverage, Jenny purchased a $50,000 property insurance policy on the cabin. While both policies were in force, a $12, covered property loss occurred. The insurers agreed to settle the claim on a pro rata basis. What is each insurer's liability? - correct answer ✔✔Dale's insurer pays $4,000 and Jenny's insurer pays $8, Under the needs approach of determining the amount of life insurance to purchase, one consideration is providing income to the surviving spouse and children during the one- or two-year period following the breadwinner's death. This period is called the: - correct answer ✔✔readjustment period Which of the following statements is (are) true with respect to the human life value approach? I. The human life value approach considers all sources of income that the family receives. II. The human life value approach does not consider the time value of money-(i.e. future cash flows are not discounted back to present value). - correct answer ✔✔neither I or II

Bob and Tonya are supporting their children, ages 4 and 2. Bob's father is also financially dependent upon Bob and Tonya. This type of family is called a(n) - correct answer ✔✔sandwiched family From an economic perspective, "premature death" is defined as death of a family head - correct answer ✔✔with outstanding financial obligations Some term insurance policies permit the policyholder to exchange the policy for a cash value policy without having to demonstrate insurability. Such term insurance policies are described as - correct answer ✔✔convertible All of the following are characteristics of variable life insurance - correct answer ✔✔- the policyholder selects where the cash value is invested

• cash values are not guaranteed
• the cash value and death benefit vary with investment performance All of the following are characteristics of variable life insurance EXCEPT - correct answer ✔✔flexible premium payments Lynn, age 32, would like to purchase permanent life insurance. She is concerned that premiums may become a burden after she retires. Given her coverage preferences, which of the following life insurance policies is the best policy for Lynn to purchase? - correct answer ✔✔limited-payment whole life insurance Which of the following statements is (are) true with respect to universal life insurance? I. Universal life insurance provides premium payment flexibility for the policyholder. II. Universal life insurance permits the policyholder to select where the cash value is invested. - correct answer ✔✔I only All of the following life insurance policies develop a cash value - correct answer ✔✔- whole life insurance
• universal life insurance
• variable life insurance

All of the following life insurance policies develop a cash value EXCEPT - correct answer ✔✔term life insurance One type of life insurance is a nonparticipating whole life policy in which cash values are based on the insurer's present mortality, investment, and expense experience. An accumulation account is used to reflect the cash value of the policy, and a fixed death benefit and maximum premium level are stated at the time the policy is issued. This type of life insurance is called - correct answer ✔✔current assumption whole life` One health insurance policy provision states that after the policy has been in force for two years, the insurer cannot void the policy or deny a claim because of a misstatement in the application. This provision is called the - correct answer ✔✔time limit on certain defenses provision All of the following were major health care problems in the U.S. that led to the passage of the Affordable Care Act EXCEPT - correct answer ✔✔universal access to medical care All of the following were major health care problems in the U.S. that led to the passage of the Affordable Care Act - correct answer ✔✔- harmful insurer practices

• rising health care expenditures
• waste and inefficiency in the medical system Which of the following statements is (are) true with respect to disability income insurance? I. A standard definition of disability is used in all disability income insurance policies. II. The longer the elimination (waiting) period in a disability income insurance policy, the higher the premium for the policy. - correct answer ✔✔neither I not II Curtis purchased medical expense insurance. The policy has a calendar-year deductible of $500 and 80- 20 coinsurance. Curtis was hospitalized with a covered illness on January 23rd. This hospitalization was his first claim under the major medical policy for the calendar year. His covered medical expenses were $20,500. How much of this amount will the insurer pay, and how much will Curtis be required to pay? - correct answer ✔✔The insurer will pay $16,000 and Curtis will pay $4,

Which of the following statements is true regarding health savings accounts (HSAs)? - correct answer ✔✔To establish an HSA and receive favorable tax treatment, you must be covered by a high-deductible health plan Paula, a 42 year-old surgeon, purchased disability income insurance. The policy defined disability as "the inability to perform the duties of your own occupation" for the first two years. After two years, disability is defined as "inability to perform the duties of any occupation for which you are reasonably suited by education, experience, and training." The policy would replace three-fourths of lost income after a six- month elimination period, with benefits payable until age 65. Recently, Paula was severely injured in an automobile accident in which her hands were crushed and had to be amputated. Which of the following statements is true regarding the benefits that Paula will receive under her disability income policy? - correct answer ✔✔Paula qualifies for benefits for at least two years. All of the following are characteristics of medical expense plans currently offered EXCEPT - correct answer ✔✔annual and lifetime limits All of the following are characteristics of medical expense plans currently offered - correct answer ✔✔- annual out-of-pocket limits

• coinsurance
• broad range of benefits Long-term care insurance policies include a provision that determines whether the insured is eligible to receive benefits. One example of this provision requires the insured to be unable to perform a certain number of activities of daily living in order to qualify for benefits. What is this policy provision used in long-term care insurance policies called? - correct answer ✔✔benefit trigger provision All of the following are reforms included in the Affordable Care Act EXCEPT: - correct answer ✔✔Insurers are permitted to use annual and lifetime benefit limits All of the following are reforms included in the Affordable Care Act : - correct answer ✔✔- Not allowing insurers to rescind health insurance policies if there was an unintentional error on the application
• Young adults are permitted to remain on their parents' health coverage until age 26
• Insurers must payout at least a specified percentage of premiums in medical claims and medical claims expenses

Prior to the passage of the Affordable Care Act, health insurers could deny coverage for medical impairments that were present prior to the effective date of the coverage. For adults, starting on January 1, 2014, insurers may no longer exclude these impairments. What are these impairments called? - correct answer ✔✔pre-existing conditions An insurance policy that combines two or more coverages in a single policy is called a(n) - correct answer ✔✔package policy Which of the following statements is (are) true with regard to the Commercial Package Policy (CPP)? I. Use of the CPP is limited to insuring manufacturing facilities. II. The CPP combines property and liability coverages in the same policy - correct answer ✔✔II only Up-and-Down Company experiences wide swings in the value of its inventory. As a condition of its property insurance coverage, Up-and-Down Company is required to file a form periodically with the insurer stating the value of the inventory at the time the form is filed. The form that must be filed is called a(n) - correct answer ✔✔reporting form The Commercial Package Policy (CPP) can provide all of the following coverages EXCEPT - correct answer ✔✔workers compensation insurance The Commercial Package Policy (CPP) can provide all of the following coverages - correct answer ✔✔commercial property coverage, equipment breakdown insurance, and commercial general liability insurance Which of the following statements is (are) true with regard to the causes-of-loss forms used in the ISO Commercial Package Policy (CPP)? I. The "special form" provides broader coverage than the "broad form" provides. II. Each of the causes-of-loss forms is written on a named-perils basis. - correct answer ✔✔I only Universal Megatronics Company (UMC) has operations in 32 nations. UMC's risk manager is concerned that there might be gaps in the property insurance written on property in foreign lands. She purchased a type of property insurance that fills in coverage gaps, including coverage for flood and earthquake. This type of policy is called - correct answer ✔✔difference in conditions insurance

Which of the following statements is (are) true with respect to business income exposures and business income insurance? I. Business income insurance covers lost income and continuing expenses during a period of business interruption because of a covered loss. II. It is possible for a business to suffer an income loss because of the occurrence of a loss at a key supplier's production facility. - correct answer ✔✔both I and II The Businessowners Policy (BOP) provides all of the following coverages EXCEPT - correct answer ✔✔life insurance on the Business owner(s) The Businessowners Policy (BOP) provides all of the following coverages - correct answer ✔✔building(structure) coverage, business personal property coverage, liability insurance In ocean marine insurance, if a portion of a ship's cargo is jettisoned to save the ship from sinking, each party to the voyage may be required to pay its share of the loss based on the proportion that its interest bears to the total value of the venture. This rule is called - correct answer ✔✔general average Some businesses, such as banks and newspapers, must remain in operation after a loss or they will lose customers. One type of insurance is designed to cover the additional cost of continuing operations and avoiding an interruption in business. This type of insurance is called: - correct answer ✔✔extra expense insurance The risk manager of Jenkins Company is concerned that the company could be held legally liable because of wrongful termination, failure to promote, discriminatory hiring practices, and similar acts. Jenkins Company can protect itself from liability arising from these wrongful acts through the purchase of - correct answer ✔✔employment-related practices liability insurance The Commercial General Liability (CGL) Policy provides all of the following coverages EXCEPT - correct answer ✔✔workers compensation liability The Commercial General Liability (CGL) Policy provides all of the following coverages - correct answer ✔✔personal and advertising injury liability, bodily injury and property damage liability, and products and completed operations liability

Which of the following statements is (are) true about the claims-made and occurrence triggers in Commercial General Liability (CGL) insurance policies?I. A claims-made policy covers claims that are first reported during the policy period, provided the event occurred after a retroactive date stated in the policy. II. Occurrence policies cover occurrences that took place during the policy period, regardless of when the claim is reported. - correct answer ✔✔both I and II Robinson Company is concerned that the liability limits the company carries under its general liability, employers liability, and business auto policies may not be high enough to pay a catastrophic liability claim. The company is also concerned that some liability claims will not be covered under its basic liability policies. Robinson Company can extend its liability limits and fill liability coverage gaps through the purchase of - correct answer ✔✔commercial umbrella insurance Liability arising out of work done by independent contractors is known as - correct answer ✔✔contingent liability Which of the following statements is (are) true with respect to Workers Compensation and Employers Liability Insurance? I. Workers compensation insurance is characterized by deductibles and coinsurance. II. Workers compensation provides coverage for occupational injury and disease - correct answer ✔✔II only An unendorsed Business Auto Coverage Form provides all of the following coverages EXCEPT - correct answer ✔✔garagekeepers liability insurance An unendorsed Business Auto Coverage Form provides all of the following coverages - correct answer ✔✔physical damage insurance on covered autos, bodily injury liability insurance, property damage liability insurance All of the following statements regarding the liability insurance provided by a businessowners policy are true EXCEPT - correct answer ✔✔The policy does not cover property damage liability and advertising liability All of the following statements regarding the liability insurance provided by a businessowners policy are true - correct answer ✔✔Legal defense costs are paid in addition to any damages the insurer must pay

on the insured's behalf, the definition of an insured includes employees while they are acting within the scope of employment, and the insured does not have to be legally liable for medical expenses to be paid under the policy Corporate leaders and board members face the risk of being sued by employees, customers, and stockholders alleging mismanagement of the business. These officials can be protected against these claims of legal liability through the purchase of - correct answer ✔✔directors and officers liability insurance Which statement is true regarding aviation risks and aircraft insurance? - correct answer ✔✔Aircraft liability coverage pays for bodily injury and property damage liability arising out of ownership and use of the aircraft