Question 1

In the case of a life insurance policy on the insured's own life,it is not necessary for the named beneficiary to have an insurable interest in the insured.

Accepted Answer

A) True 
 B)False

Question 2

In addition to the coverages provided in a policy of fire insurance,homeowners insurance provides coverage for:

Accepted Answer

A)  an annuity component 
B)  private mortgage insurance 
C)  flood insurance 
D)  personal liability 
E)  disability of the homeowner 
A)  an annuity component 
B)  private mortgage insurance 
C)  flood insurance 
D)  personal liability 
E)  disability of the homeowner

Question 3

Under the McCarran-Ferguson Act:

Accepted Answer

A)  insurance company regulation is the responsibility of the states 
B)  insurance rates became subject to regulation at the federal level 
C)  several large insurance companies were broken up into smaller companies 
D)  banks were allowed to begin selling life insurance 
E)  the whole life form of life insurance was authorized 
A)  insurance company regulation is the responsibility of the states 
B)  insurance rates became subject to regulation at the federal level 
C)  several large insurance companies were broken up into smaller companies 
D)  banks were allowed to begin selling life insurance 
E)  the whole life form of life insurance was authorized

Question 4

Mindy has decided to open a business that sells novelty exploding chocolates.Mindy has actually been in the candy business for many years,but recently learned of a way to encase high-pressure carbon dioxide into a special piece of sugar.The sugar piece will be surrounded by chocolate.As the hollow piece of sugar melts in someone's mouth,or if the person bites on the sugary center,the carbon dioxide will explode with surprising force.The force is not so great as to be painful most of the time,but it will certainly shock anyone who is not expecting it.Thus,Sandy expects that some customers will buy the candy for themselves,but many will buy it to offer to others as a practical joke.From the outside,the candy looks like any other candy.Sandy has formed a new corporation for this venture.Sandy has come to you for information on the types of insurance that she should consider purchasing for this business.What would you tell her?

Accepted Answer

Apart from the wisdom of this product,Sa

Question 5

Universal life insurance combines the features of:

Accepted Answer

A)  whole life and ordinary life 
B)  limited-payment life and whole life 
C)  ordinary life and straight life 
D)  whole life and annuity life 
E)  whole life and term life 
A)  whole life and ordinary life 
B)  limited-payment life and whole life 
C)  ordinary life and straight life 
D)  whole life and annuity life 
E)  whole life and term life

Question 6

Bob is 25 years old and has a 40-year-old uncle who has recently entered his second adolescence.Bob is close to this uncle although the uncle does not provide Bob with any support.Within the past year,Bob's uncle has obtained a divorce,bought a large customized motorcycle,and begun smoking and drinking heavily.In addition,he has begun hanging out in bars known for periodic violence.Bob decides that taking out a life insurance policy on his uncle could be a good investment.In this situation:

Accepted Answer

A)  Bob has an insurable interest in his uncle because of the close family relationship. 
B)  Bob has an insurable interest,but only if he is named in his uncle's will to receive assets from his uncle's estate. 
C)  Bob does not have an insurable interest because he took out the policy only after his uncle's lifestyle change. 
D)  Bob does not have an insurable interest because the relationship is too remote and he receives no support from the uncle. 
E)  Bob does not have an insurable interest because parents and children are the only persons who can have an insurable interest in the life of another person. 
A)  Bob has an insurable interest in his uncle because of the close family relationship. 
B)  Bob has an insurable interest,but only if he is named in his uncle's will to receive assets from his uncle's estate. 
C)  Bob does not have an insurable interest because he took out the policy only after his uncle's lifestyle change. 
D)  Bob does not have an insurable interest because the relationship is too remote and he receives no support from the uncle. 
E)  Bob does not have an insurable interest because parents and children are the only persons who can have an insurable interest in the life of another person.

Question 7

Most insurance companies allow valuable items to be covered under an insured's homeowners policy thereby eliminating the need for any additional insurance.

Accepted Answer

A) True 
 B)False

Question 8

Insurance can be sold directly to the insured by the insurer.

Accepted Answer

A) True 
 B)False

Question 9

Title insurance protects against defects in title such as liens or encumbrances that are not disclosed on the title insurance policy.

Accepted Answer

A) True 
 B)False

Question 10

Life insurance is really death insurance.

Accepted Answer

A) True 
 B)False

Question 11

Sam owns his own business.He has several different types of insurance policies to cover various risks to his business.The policies have various coverage limits.Sam is considering purchasing a policy that would add coverage in excess of all these individual policies up to $1 million.The type of policy that Sam is interested in adding is:

Accepted Answer

A)  double indemnity 
B)  comprehensive 
C)  fidelity 
D)  umbrella 
E)  group 
A)  double indemnity 
B)  comprehensive 
C)  fidelity 
D)  umbrella 
E)  group

Question 12

A coinsurance clause in a fire insurance policy provides which of the following?

Accepted Answer

A)  The insured must buy policies covering the insured property from at least two different companies. 
B)  The insurer will contract with another company to share the risk for loss on the property. 
C)  The insured must purchase insurance coverage for a minimum percentage of the property's value or will be required to bear a portion of any losses. 
D)  The insurance policies are backed up by the insurer obtaining reinsurance. 
E)  An independent government agency will cover any covered claims that the insurer is unable to pay due to bankruptcy,and other factors. 
A)  The insured must buy policies covering the insured property from at least two different companies. 
B)  The insurer will contract with another company to share the risk for loss on the property. 
C)  The insured must purchase insurance coverage for a minimum percentage of the property's value or will be required to bear a portion of any losses. 
D)  The insurance policies are backed up by the insurer obtaining reinsurance. 
E)  An independent government agency will cover any covered claims that the insurer is unable to pay due to bankruptcy,and other factors.

Question 13

The type of life insurance that is "straight insurance" for a fixed period of time is:

Accepted Answer

A)  double indemnity life 
B)  universal life 
C)  whole life 
D)  variable life 
E)  term life 
A)  double indemnity life 
B)  universal life 
C)  whole life 
D)  variable life 
E)  term life

Question 14

Smaller companies usually do not carry directors' and officers' liability insurance as it is too expensive.

Accepted Answer

A) True 
 B)False

Question 15

A homeowners policy has the same coverages as a fire insurance policy except that it is written for a homeowner rather than a business.

Accepted Answer

A) True 
 B)False

Question 16

An insured that does not have an insurable interest in the property being insured is treated like a wager and it cannot be enforced.

Accepted Answer

A) True 
 B)False

Question 17

When must an insurable interest exist for life insurance and property insurance,respectively?

Accepted Answer

A)  At the time of policy issuance,and at the time of loss. 
B)  At the time of policy issuance,and at the time of payment of the premium. 
C)  At the time of loss,and at the time of policy issuance. 
D)  At the time of policy issuance for both life insurance and property insurance. 
E)  At the time of loss for both life insurance and property insurance. 
A)  At the time of policy issuance,and at the time of loss. 
B)  At the time of policy issuance,and at the time of payment of the premium. 
C)  At the time of loss,and at the time of policy issuance. 
D)  At the time of policy issuance for both life insurance and property insurance. 
E)  At the time of loss for both life insurance and property insurance.

Question 18

Due to rising insurance costs,most modern fire insurance policies do not provide replacement cost insurance.

Accepted Answer

A) True 
 B)False

Question 19

Incontestability clauses are invalid as they are not fair to insurers.

Accepted Answer

A) True 
 B)False

Question 20

Steve has a car insurance policy that provides full coverage.Steve was involved in an accident recently that resulted in significant damage to his car,and he also received some bruises.Steve suspected he was partly at fault and decided not to report the accident to his insurance company.Steve made a small payment to the other driver involved,who did not have insurance.Steve also paid to have his own car repaired.Several months later,Steve receives a summons and has been sued by the other driver for $200,000.Steve also learns at about the same time that he has an internal injury that will require surgery to correct.Steve notifies his insurance company about the accident,the amounts he has spent in connection with it,and the lawsuit.Steve is afraid that his insurance company will cancel his insurance if it learns too much about the accident or learns about Steve's eyesight problem,which he did not mention on his application with the company four years ago.Thus,he has been avoiding the insurance company's phone calls and requests for information about the accident.However,Steve believes the company has an obligation to reimburse him and defend the suit.Discuss the legal issues involved.

Accepted Answer

Steve has breached his duties of notifyi

Exam 50: Insurance

In the case of a life insurance policy on the insured's own life,it is not necessary for the named beneficiary to have an insurable interest in the insured.

In addition to the coverages provided in a policy of fire insurance,homeowners insurance provides coverage for:

Under the McCarran-Ferguson Act:

Universal life insurance combines the features of:

Most insurance companies allow valuable items to be covered under an insured's homeowners policy thereby eliminating the need for any additional insurance.

Insurance can be sold directly to the insured by the insurer.

Title insurance protects against defects in title such as liens or encumbrances that are not disclosed on the title insurance policy.

Life insurance is really death insurance.

A coinsurance clause in a fire insurance policy provides which of the following?

The type of life insurance that is "straight insurance" for a fixed period of time is:

Smaller companies usually do not carry directors' and officers' liability insurance as it is too expensive.

A homeowners policy has the same coverages as a fire insurance policy except that it is written for a homeowner rather than a business.

An insured that does not have an insurable interest in the property being insured is treated like a wager and it cannot be enforced.

When must an insurable interest exist for life insurance and property insurance,respectively?

Due to rising insurance costs,most modern fire insurance policies do not provide replacement cost insurance.

Incontestability clauses are invalid as they are not fair to insurers.

Legal Heritage and the Information Age

Court Systems and Jurisdiction

Judicial, Alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Strict Liability and Product Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Internet Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Sales and Lease Warranties

Creation of Negotiable Instruments

Transferability and Holder In Due Course

Liability,Defenses and Discharge

Checks, the Banking System, and E-Money

Creditor's and Debtor's Rights

Secured Transactions and Electronic Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment,Worker Protection,and Immigration Laws

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Businesses, Entrepreneurs, and General Partnerships

Limited Partnerships and Limited Liability Limited Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Business

Investor Protection and Online Securities Transactions

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection and Global Warming

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord Tenant Law and Land Use Regulation

Accountants' Liability

Wills, Trusts, and Elder Law

Family Law

International and World Trade Law

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