Question 1

Reduced paid-up insurance:

Accepted Answer

A) Buys protection with paying new premiums 
B) Continues for 20 years 
C) Results in a face amount less than the original amount 
D) Means original face amount is continued for a certain number of years 
E) None of these 
A) Buys protection with paying new premiums 
B) Continues for 20 years 
C) Results in a face amount less than the original amount 
D) Means original face amount is continued for a certain number of years 
E) None of these

Question 2

The beneficiary pays the insurance to the insured.

Accepted Answer

A) True 
 B)False

Question 3

As a result of few suits as well as high operating costs, no-fault has reduced some premium costs.

Accepted Answer

A) True 
 B)False

Question 4

If the insured cancels a fire insurance policy after seven months, the refund will be (use table in handbook):

Accepted Answer

A) 67% 
B) 7/12 of policy 
C) 5/12 of policy 
D) 33% 
E) None of these 
A) 67% 
B) 7/12 of policy 
C) 5/12 of policy 
D) 33% 
E) None of these

Question 5

Howard Hane had taken out a $130,000 fire insurance policy for his new restaurant at a rate of $.82 per $100. Nine months later, Howard canceled the policy and decided to move his store to a new location. The cost of the premium to Howard is (use the table in the handbook):

Accepted Answer

A) $1,066 
B) $863.46 
C) $1,606 
D) $836.64 
E) None of these 
A) $1,066 
B) $863.46 
C) $1,606 
D) $836.64 
E) None of these

Question 6

The one receiving the insurance coverage is the insured.

Accepted Answer

A) True 
 B)False

Question 7

All premiums for universal life remain the same.

Accepted Answer

A) True 
 B)False

Question 8

Extended term insurance means the policy continues but at a face amount that is less than the original policy.

Accepted Answer

A) True 
 B)False

Question 9

If the insurance company cancels a fire insurance policy, the refund to the insured will be less than if the insured cancels the policy.

Accepted Answer

A) True 
 B)False

Question 10

The property of Lance's Garage is worth $90,000. Lance has a fire insurance policy of $40,000 that contains an 80% coinsurance clause. On a fire that causes $60,000 of damage, the insurance company pays:

Accepted Answer

A) $27,777.78 
B) $27,777.87 
C) $33,333.33 
D) $33,334. 00 
E) None of these 
A) $27,777.78 
B) $27,777.87 
C) $33,333.33 
D) $33,334. 00 
E) None of these

Question 11

The premium for fire insurance is found by the insured value divided by 100 times the table rate.

Accepted Answer

A) True 
 B)False

Question 12

Permanent protection is provided by term insurance.

Accepted Answer

A) True 
 B)False

Question 13

Abby Kaminsky, age 32, has decided to take out a limited payment life policy. She chose this since she expects her income to decline in future years. Abby has decided to take out a 20-year payment life policy with a coverage amount of $200,000. Using the tables in the handbook, her annual premium will be:

Accepted Answer

A) $1,158 
B) $2,316 
C) $2,136 
D) $1,518 
E) None of these 
A) $1,158 
B) $2,316 
C) $2,136 
D) $1,518 
E) None of these

Question 14

Twenty-payment life requires premiums for 20 years although the insured is protected till death.

Accepted Answer

A) True 
 B)False

Question 15

The actual amount of insurance carried is called the face value.

Accepted Answer

A) True 
 B)False

Question 16

The face amount is the amount stated in the policy.

Accepted Answer

A) True 
 B)False

Question 17

The premium is the payment(s) that is made to pay for the cost of an insurance policy.

Accepted Answer

A) True 
 B)False

Question 18

The one named in the policy to receive the insurance proceeds in case of the death of the one taking out the policy is the:

Accepted Answer

A) Insured 
B) Insurer 
C) Beneficiary 
D) Both insured and beneficiary 
E) None of these 
A) Insured 
B) Insurer 
C) Beneficiary 
D) Both insured and beneficiary 
E) None of these

Question 19

A falling object that dents a car would be covered under comprehensive insurance.

Accepted Answer

A) True 
 B)False

Question 20

Insurance required to meet coinsurance is the coinsurance rate times the replacement value.

Accepted Answer

A) True 
 B)False

Exam 20: Life, Fire and Auto Insurance

Reduced paid-up insurance:

The beneficiary pays the insurance to the insured.

As a result of few suits as well as high operating costs, no-fault has reduced some premium costs.

If the insured cancels a fire insurance policy after seven months, the refund will be (use table in handbook):

Howard Hane had taken out a $130,000 fire insurance policy for his new restaurant at a rate of $.82 per $100. Nine months later, Howard canceled the policy and decided to move his store to a new location. The cost of the premium to Howard is (use the table in the handbook):

The one receiving the insurance coverage is the insured.

All premiums for universal life remain the same.

Extended term insurance means the policy continues but at a face amount that is less than the original policy.

If the insurance company cancels a fire insurance policy, the refund to the insured will be less than if the insured cancels the policy.

The property of Lance's Garage is worth $90,000. Lance has a fire insurance policy of $40,000 that contains an 80% coinsurance clause. On a fire that causes $60,000 of damage, the insurance company pays:

The premium for fire insurance is found by the insured value divided by 100 times the table rate.

Permanent protection is provided by term insurance.

Twenty-payment life requires premiums for 20 years although the insured is protected till death.

The actual amount of insurance carried is called the face value.

The face amount is the amount stated in the policy.

The premium is the payment(s) that is made to pay for the cost of an insurance policy.

The one named in the policy to receive the insurance proceeds in case of the death of the one taking out the policy is the:

A falling object that dents a car would be covered under comprehensive insurance.

Insurance required to meet coinsurance is the coinsurance rate times the replacement value.

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