Exam 6: Fundamentals of Insurance

Rusty is the president of The Huge Insurance Company. His Vice-President in charge of Finance comes to him one day and says "Rusty, our combined ratio for the year is 95%." Rusty replies, "Wooo hooo, profit sharing bonuses for everyone!" Why isn't Rusty upset about this combined ratio?

Proximate cause means:

Which of the following statements is correct about the fair rate of return for insurance companies?

All of the following are federally-sponsored insurance activities in the U.S. except:

Smoking cigarettes is an example of:

Which of the following is a true statement?

The expense ratio equals:

If you were an underwriter of personal auto insurance, which of the following underwriting criteria would you most prefer to use because of its incentive value?

Midlands Insurance has 100 policyholders. It expects that this year's losses for all of its policyholders will total $111,000. The predicted expenses of operating the insurance pool are $46,000, expected investment earnings are $20,000, and the actuary determines that there is no need to charge for a risk reserve this year. What should the premium for each of Midland's 100 policyholders be?

Which of the following reasons for canceling a wedding would likely not be covered by a typical wedding insurance policy?

If you were a life insurance underwriter, which of the following underwriting criteria would you MOST prefer to use because of its reliability?

If insurance did not exist in the United States, which of the following might reasonably be expected to happen?

Drinking a lot of alcohol before swimming could cause a person to drown. In this context, which of the following is the hazard?

A burglar enters Marcia's home and steals $10,000 worth of appliances. Marcia tells the insurance company that the appliances were worth $20,000. This overstatement of the loss is an example of:

The Legal Definition of insurance:

All of the following are costs to society arising from an insurance system's operation except:

Under an open perils insurance policy:

Marine insurance protects property in transit from damage.