Insurance Unit Test

The purpose of this action is to take a specific risk, which is detailed in the insurance contract, and pass it from one party who does not wish to have this risk, the insured, to a party who is willing to take on the risk for a fee, or premium, the insurer. 

• A.  Term life insurance  
• B.  Whole life insurance  
• C.  Universal life insurance
• D. Transfer Of Risk

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.

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      

Pat has a savings account and a car loan from a not-for-profit financial institution owned by its members. She is probably a member of what type of financial institution?

• Commercial Bank
• Credit Union

Collision coverage on your car insurance policy that will repair damages to your vehicle when something collides with your vehicle. 

• Flexible expenses
• Fixed expanses
• Collision coverage

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?

• To reduce the premium on the homeowner?s insurance.
• To protect the person who owns the television from liability for damages.
• To show the insurance company a good faith investment has been made.
• 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

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

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."

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