Wise Practice Test (Insurance)

A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent?

• A.  "I think I need a personal property floater."
• B.  "I think I should get speculative risk insurance."
• C.  "I will deduct the cost of the jewelry from my premium."
• D.   "I realize that if this jewelry is stolen it will be considered vicarious liability."

A person buys a flat screen, plasma, theater-like television. The person has homeowner's insurance. Why would it be appropriate to add a personal property floater to that insurance?

•  A.  To reduce the premium on the homeowner?s insurance.
•  B.  To protect the person who owns the television from liability for damages.  
•  C.  To show the insurance company a good faith investment has been made.  
•  D.  To cover the cost of replacement should the television get damaged or stolen.  

For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy.  At the time of surrender, the person will receive

• A.  one-fifth of the $20,000 face value.  
• B.  $20,000 less the premiums paid.  
• C.  a calculated amount of money which includes the premiums paid as well as the interest on that money.  
• D.  a calculated amount of money that must be converted to a term life insurance policy.  

The only type of life insurance that does not develop a cash value is:

• A.  Term life insurance  
• B.  Whole life insurance  
• C.  Universal life insurance
• D.  Variable universal life insurance  

A person buys a homeowner's insurance policy with a $250 deductible, which means the person will

• A.  have to pay a quarterly premium of $250.
• B.  have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.
• C.  only receive payment from the insurance company of $250 for any single article damaged.
• D.  not be responsible for the first $250 of the claimed damages.

The purpose of Insurance is NOT to:  

• A.  Diversify an investment portfolio
• B.  Share risk with other policy holders and the insurance company
• C.  Protect assets
• D.  Protect against potential losses  

Sally took out a $50,000 life insurance policy.  The $50,000 amount of coverage is called the:

• A.  Cash value
• B.  Premium value
• C.  Death benefit or face value
• D.  Annuity value

Lucy has no insurance. The situation(s) should she consider insuring against first are:

• A.  Death so her financial obligations are paid
• B.  Losses resulting from an illness, accident, or disability
• C.  Property losses and auto accidents
• D.  Auto collision, and burglary  

When a self-employed person decides to purchase disability insurance it is generally to

• A.  lessen the possibility of becoming injured.
• B.  protect against the financial effects of not being able to work.
• C.  Separate value
• D.  Premium or annuity value      

Mr. Akon's wife died. The money he received as the beneficiary on her life insurance is called the:

• A.  Cash value
• B.  Death benefit or face value
• C.  Separate value
• D.  Premium or annuity value