Question 1 of 24
3.0 Points
Michael wants to make sure that life insurance proceeds are available to pay his outstanding mortgage balance if he dies. He purchased a type of life insurance in which the amount of coverage gradually declines, just as this outstanding mortgage balance gradually declines. What is this type of life insurance?
Question 2 of 24
4.0 Points
Connie has a major medical policy with a $200 deductible. She is required to pay 25% of covered expenses in excess of the deductible. The insurer will pay 75% of expenses in excess of the deductible. If Connie has eligible medical expenses of $10,000, how much will be paid by her insure
Question 3 of 24
4.0 Points
Name one primary advantage of a Health Savings Account (HSA’s).
Question 4 of 24
3.0 Points
David owns a liquor store in a high-crime area. In order to obtain a reduced insurance premium, David promised to have a burglar alarm operating at the store when the store was closed. When incorporated into an insurance contract, what is this type of agreement called?
Question 5 of 24
4.0 Points
When Ben applied for life insurance, he was asked on the application if he smoked or used tobacco products. Ben answered, “No.” In reality, Ben smokes two packs of cigarettes a day. The policy was issued at the “preferred, nonsmoker rate.” If Ben dies 6 months after the policy is issued, upon what grounds will the insurer be able to legally deny the claim?
Question 6 of 24
4.0 Points
Dirk suffered a heart attack and was rushed to the hospital where heart surgery was performed. His total bill for medical services was $50,000. Dirk has a major medical policy with a $1,000 calendar-year deductible and a $5,000 out-of-pocket limit. His coinsurance is 20%, and the out-of-pocket limit applies to coinsurance only. Assuming this hospitalization was the first medical care that Dirk received during the year and that all of the hospital services were eligible for coverage under the policy, how much of the $50,000 will the insurer pay?
Question 7 of 24
4.0 Points
Regarding life insurance, how is “human life value” defined?
Question 8 of 24
3.0 Points
Frank asked his company’s employee benefits director if his group health coverage could be converted to individual coverage. The benefits director said, “Yes, you can convert to an individual policy, and the coverage is identical to your group coverage.” Frank quit his job and converted to an individual policy. Six months later he filed a claim. He was dismayed to learn the conversion policy was limited compared to the group coverage, and his claim was denied. What legal doctrine will allow Frank to bring a successful legal action against his former employer because he was financially harmed due to his reasonable reliance upon a representation of fact?
Question 9 of 24
4.0 Points
Kristen has an individual medical expense policy with a $1,000 calendar-year deductible, a $5,000 out-of-pocket limit, and a 20% coinsurance requirement. Kristen was hospitalized for a surgical procedure in March, her first health care treatment received during the year. The total bill was $20,000. How much of the bill is Kristen’s responsibility?
Question 10 of 24
4.0 Points
One provision of the Affordable Care Act provides the creation in each state of a transparent and competitive insurance marketplace where individuals and small firms with fewer than 100 employees can purchase affordable and qualified health coverage. What is this “marketplace” called?
Question 11 of 24
4.0 Points
A pharmaceutical company employs a young chemist who is responsible for three new patents last year and for the development of the company’s two best-selling drugs. The company purchased a large life insurance policy on the chemist. Was the “insurable interest” requirement met in this case, and why or why not?
Question 12 of 24
4.0 Points
Carl would like to purchase life insurance. He would also like to invest in a mutual fund. An agent told Carl about a form of life insurance in which Carl could select where the saving component is invested. This form of life insurance has fixed premiums and the cash value is not guaranteed. What is this type of life insurance?
Question 13 of 24
3.0 Points
Jan needed health insurance. She met with an agent who described the provisions of a health insurance policy. Jan purchased the policy. When she received the policy, she noted that several provisions were different from the provisions the agent described. She was not satisfied with the policy and immediately sent it back to the agent with a note stating her reasons for returning the policy. Jan is guaranteed a premium refund because of which policy provision?
Question 14 of 24
4.0 Points
Richard is using the capital retention approach to determine how much life insurance to purchase. Richard would like to provide $35,000 per year to his family, forever, if he dies. The assets that he has today will provide $25,000 in annual income without the liquidation of these assets. If life insurance proceeds can be invested to earn a 5% annual return, how much life insurance should Richard purchase to fund the additional income needed to meet the $35,000 annual income goal?
Question 15 of 24
4.0 Points
Sue’s office building was damaged by a fire caused by a careless tenant. After paying Sue for the loss, the insurance company sued the tenant to recover its loss. This suit is based upon what principle?
Question 16 of 24
4.0 Points
Lori has three fire insurance policies on her office building. The policy from Company A is for $400,000 and the policies from Companies B and C are for $100,000 each. If Lori has a $360,000 loss, how much of the loss will be covered by each policy if the loss is settled on a pro-rata basis by the insurers?
Question 17 of 24
4.0 Points
Sarah is using the needs approach to determine how much life insurance to buy. Her cash needs are $30,000; her income needs are $140,000; and special needs are $100,000. Sarah has the following assets: $20,000 in bank accounts, $30,000 in retirement plans, and $40,000 in investment accounts. Sarah owns no individual life insurance. She is covered by a $50,000 group life insurance policy through her employer. Based on this information, how much additional life insurance should Sarah purchase?
Question 18 of 24
3.0 Points
Sam’s furniture was destroyed by a fire. The furniture cost $1200 when it was purchased, but similar new furniture now costs $1800. Assuming the furniture was 50% depreciated, what is the actual cash value of Sam’s loss?
Question 19 of 24
4.0 Points
One controversial provision of the Affordable Care Act is the expansion of a public assistance program designed to make health coverage available to low-income individuals. By increasing the maximum income level that can be earned and still qualify for benefits, millions of individuals are eligible for coverage under this public assistance program. What is the name of this public assistance program?
Question 20 of 24
4.0 Points
Janice purchased a living room set for $1,000 and insured this furniture on an actual cash value basis. Two years later the living room set was destroyed by a covered peril. At the time of loss, the property had depreciated in value by 25%. The replacement cost of the furniture at the time of loss was $1200. Assuming no deductible, how much will Janice receive from her insurer?
Question 21 of 24
4.0 Points
Tamara purchased a term insurance policy when she had high life insurance needs and limited income. Now Tamara can afford whole life insurance. What term life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable?
Question 22 of 24
3.0 Points
Julian, age 45, would like to determine how much life insurance to purchase using the human life value approach. He assumes his average annual earnings over the next 20 years will be $40,000. Of this amount, $20,000 is available annually for the support of his family. Julian will generate this income for 20 more years and he believes that 5% is the appropriate interest (discount) rate. The present value of one dollar payable for 20 years at a discount rate of 5% is $12.46. What is Julian’s human life value?
Question 23 of 24
4.0 Points
David owns a commercial building with a replacement cost of $4 million. The building is insured on a replacement cost basis for $2.4 million under a fire insurance policy that has an 80% coinsurance clause. How much will David collect if the building sustains a covered fire loss with a replacement cost of $80,000?
Question 24 of 24
4.0 Points
Erica has three liability policies which provide for contribution by equal shares if other insurance applies to a loss. How much will each policy pay for a $3,000,000 liability judgment if policy A provides $500,000 of coverage, policy B provides $1,000,000 of coverage, and policy C provides $3,000,000 of coverage?