Exam 17: Insurance Companies and Pension Funds

Why do property/casualty insurance companies place a large percentage of their investments in bonds? Why they also need to maintain large surpluses in certain years?

(Essay)

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Question 21

Liability risk is much easier to gauge than property risk.

(True/False)

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Question 22

Coinsurance and deductibles are a form of loss-sharing designed to limit objective risk.

(True/False)

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Question 23

Life insurance companies are the oldest financial intermediary in the United States.

(True/False)

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Question 24

An annuity provides both insurance against premature death and savings features.

(True/False)

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Question 25

All insurers must deal with the problem of adverse selection but certain types of insurance such as flood insurance have greater adverse selection problems.

(True/False)

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Question 26

Social Security is a fully funded pension program.

(True/False)

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Question 27

Since insurance pricing is an application of the theorem of large number, the risk to be insured must be homogeneous, similar, and occurring by chance.

(True/False)

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Question 28

Universal life became popular in the inflationary, high interest periods of the 1980s because interest rates on universal life policies vary with market rates.

(True/False)

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Question 29

Many insurance companies use standard policy forms developed by the Insurance Services Office (ISO).

(True/False)

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Question 30

Over the long term Social Security could be as much as $10 trillion underfunded.

(True/False)

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Question 31

The liability of Lloyds of London members on assumed risks are unlimited.

(True/False)

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Question 32

Describe the basics of whole life, variable, universal life and term life policies. What are the advantages and disadvantages of policies with cash values and those without?

(Essay)

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Question 33

Social Security benefits stress individual equity rather than social adequacy.

(True/False)

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Question 34

Municipal bonds are a logical investment for "qualified" pension plans.

(True/False)

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Question 35

Policy reserves are the major asset of the typical life insurance companies.

(True/False)

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Question 36

The assets of life insurance companies need not be as liquid as those of casualty/property insurance companies because life companies have greater certainty of claims.

(True/False)

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Question 37

Property/liability insurance companies pay little federal income tax, thus explaining their large portfolio of state and municipal, tax-exempt securities.

(True/False)

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Question 38

How does the Affordable Care and Patient Protection Act worsen the adverse selection problem and the moral hazard problem in health insurance?

(Essay)

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Question 39

"Superannuation" refers to living long enough to use up all your retirement funds.

(True/False)

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Question 40

Showing 21 - 40 of 47

Why do property/casualty insurance companies place a large percentage of their investments in bonds? Why they also need to maintain large surpluses in certain years?

Liability risk is much easier to gauge than property risk.

Coinsurance and deductibles are a form of loss-sharing designed to limit objective risk.

Life insurance companies are the oldest financial intermediary in the United States.

An annuity provides both insurance against premature death and savings features.

All insurers must deal with the problem of adverse selection but certain types of insurance such as flood insurance have greater adverse selection problems.

Social Security is a fully funded pension program.

Since insurance pricing is an application of the theorem of large number, the risk to be insured must be homogeneous, similar, and occurring by chance.

Universal life became popular in the inflationary, high interest periods of the 1980s because interest rates on universal life policies vary with market rates.

Many insurance companies use standard policy forms developed by the Insurance Services Office (ISO).

Over the long term Social Security could be as much as $10 trillion underfunded.

The liability of Lloyds of London members on assumed risks are unlimited.

Describe the basics of whole life, variable, universal life and term life policies. What are the advantages and disadvantages of policies with cash values and those without?

Social Security benefits stress individual equity rather than social adequacy.

Municipal bonds are a logical investment for "qualified" pension plans.

Policy reserves are the major asset of the typical life insurance companies.

The assets of life insurance companies need not be as liquid as those of casualty/property insurance companies because life companies have greater certainty of claims.

Property/liability insurance companies pay little federal income tax, thus explaining their large portfolio of state and municipal, tax-exempt securities.

How does the Affordable Care and Patient Protection Act worsen the adverse selection problem and the moral hazard problem in health insurance?

"Superannuation" refers to living long enough to use up all your retirement funds.

An Overview of Financial Markets and Institutions

The Federal Reserve and Its Powers

The Fed and Interest Rates

The Level of Interest Rates

Bond Prices and Interest Rate Risk

The Structure of Interest Rates

Money Markets 1

Bond Markets

Mortgage Markets and Mortgagebacked Securities

Equity Markets

Derivatives Markets

International Markets

Commercial Bank Operations

International Banking

Regulation of Financial Institutions

Thrift Institutions and Finance Companies

Investment Banking

Investment Companies

Risk Management in Financial Institutions

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