Question 1

In insurance policies with an incontestability clause where the insured has misstated his or her age,the _____.

Accepted Answer

A)  insurer cannot contest its liability on the basis of the insured's misrepresentations 
B)  insured can take advantage of a misstatement of age clause if the misrepresentation changes the premium by below 50 percent 
C)  insurer cannot cancel the policy unless it discovers the misrepresentation within a specified time period 
D)  insured can object on the basis of absence of insurable interest 
A)  insurer cannot contest its liability on the basis of the insured's misrepresentations 
B)  insured can take advantage of a misstatement of age clause if the misrepresentation changes the premium by below 50 percent 
C)  insurer cannot cancel the policy unless it discovers the misrepresentation within a specified time period 
D)  insured can object on the basis of absence of insurable interest C

Question 2

The insured must pay all past-due premiums and a stated amount of interest along with proof of insurability to secure reinstatement after a life insurance policy has lapsed.

Accepted Answer

A) True 
 B)False  True

Question 3

_____ bars an insurer from challenging its liability on a policy on the basis of an insured's misrepresentations if the policy has been in force for a specified period of time.

Accepted Answer

A)  Reinstatement clause 
B)  Pro rata clause 
C)  Incontestability clause 
D)  Coinsurance clause 
A)  Reinstatement clause 
B)  Pro rata clause 
C)  Incontestability clause 
D)  Coinsurance clause C

Question 4

Health insurance policies generally require the insured to pay up to a certain amount each year after the insurer's payment obligation begins.

Accepted Answer

A) True 
 B)False

Question 5

Describe portable health insurance.

Accepted Answer

Rising costs of hospitalization,medical

Question 6

Flood-related damage to property is an example of a(n)_____.

Accepted Answer

A)  excluded peril 
B)  covered peril 
C)  conditional peril 
D)  open peril 
A)  excluded peril 
B)  covered peril 
C)  conditional peril 
D)  open peril

Question 7

Douglas obtained a $100,000 insurance policy on his warehouse.The policy contained an 80 percent coinsurance clause.An accidental fire totally damaged the building that had a fair market value of $250,000 at the time of the loss.How much will Douglas recover from his insurance company?

Accepted Answer

A)  $80,000 
B)  $100,000 
C)  $200,000 
D)  $250,000 
A)  $80,000 
B)  $100,000 
C)  $200,000 
D)  $250,000

Question 8

If Geoff makes a fraudulent statement about his medical history and fails to disclose relevant facts about his medical history in his application for insurance,the insurance company _____.

Accepted Answer

A)  has a right to cancel Geoff's policy 
B)  cannot consider the contract voidable 
C)  has to adjust the benefits payable at Geoff's discretion 
D)  cannot cancel the policy unless Geoff misrepresented his age as well 
A)  has a right to cancel Geoff's policy 
B)  cannot consider the contract voidable 
C)  has to adjust the benefits payable at Geoff's discretion 
D)  cannot cancel the policy unless Geoff misrepresented his age as well

Question 9

In life insurance policies,the person who purchases the policy must have an insurable interest in the life being insured at the time the loss occurs,not at the time the policy was issued.

Accepted Answer

A) True 
 B)False

Question 10

What are an insurer's obligations in a liability insurance contract?

Accepted Answer

There are several general duties common

Question 11

According to the _____,when the insured has purchased insurance policies from more than one insurer,the loss will be apportioned among the insurance companies.

Accepted Answer

A)  coinsurance clause 
B)  pro rata clause 
C)  exculpatory clause 
D)  valued clause 
A)  coinsurance clause 
B)  pro rata clause 
C)  exculpatory clause 
D)  valued clause

Question 12

Which of the following statements is true about health insurance contracts?

Accepted Answer

A)  Health insurance contracts normally do not provide coverage for medical expenses resulting from preexisting conditions. 
B)  Most people receive their insurance coverage from individual policies that are provided by employers. 
C)  The Consolidated Omnibus Budget Reconciliation Act prevents companies that do not provide portable health insurance contracts from issuing group policies. 
D)  Portable health insurance contracts allow insurance companies to stop covering people who change their jobs. 
A)  Health insurance contracts normally do not provide coverage for medical expenses resulting from preexisting conditions. 
B)  Most people receive their insurance coverage from individual policies that are provided by employers. 
C)  The Consolidated Omnibus Budget Reconciliation Act prevents companies that do not provide portable health insurance contracts from issuing group policies. 
D)  Portable health insurance contracts allow insurance companies to stop covering people who change their jobs.

Question 13

_____ generally require that the insured pay a deductible each year before the insurer's payment obligation begins.

Accepted Answer

A)  Property insurance policies 
B)  Life insurance policies 
C)  Liability insurance policies 
D)  Health insurance policies 
A)  Property insurance policies 
B)  Life insurance policies 
C)  Liability insurance policies 
D)  Health insurance policies

Question 14

The insurer may not exercise a right of subrogation if it is required to pay for the loss of property under a fire insurance contract.

Accepted Answer

A) True 
 B)False

Question 15

Flood-related damage to property is a common excluded peril in property insurance contracts.

Accepted Answer

A) True 
 B)False

Question 16

Describe the insurable interests required in life and property insurance.

Accepted Answer

In life insurance contracts,the required

Question 17

Property insurance policies are generally nonassignable.

Accepted Answer

A) True 
 B)False

Question 18

A warranty is an implied condition of an insurance contract.

Accepted Answer

A) True 
 B)False

Question 19

An important distinction between valid insurance contracts and wagering contracts is that:

Accepted Answer

A)  insurance contracts create a new risk that did not previously exist, while wagering contracts don't. 
B)  wagering contracts are not contrary to public policy, while insurance contracts are. 
C)  insurance contracts transfer existing risks, while wagering contracts create new ones. 
D)  unlike insurance contracts, wagering contracts are indemnity contracts. 
A)  insurance contracts create a new risk that did not previously exist, while wagering contracts don't. 
B)  wagering contracts are not contrary to public policy, while insurance contracts are. 
C)  insurance contracts transfer existing risks, while wagering contracts create new ones. 
D)  unlike insurance contracts, wagering contracts are indemnity contracts.

Question 20

As a general rule,if an applicant suffers a loss after applying but before the insurer formally accepts the application:

Accepted Answer

A)  the insurer must cover the loss. 
B)  the applicant and the insured must bear the loss equally. 
C)  the applicant must bear the loss. 
D)  the insurer must cover the loss only if there is no binder. 
A)  the insurer must cover the loss. 
B)  the applicant and the insured must bear the loss equally. 
C)  the applicant must bear the loss. 
D)  the insurer must cover the loss only if there is no binder.

Exam 37: Insurance-Part Seven Commercial Paper

In insurance policies with an incontestability clause where the insured has misstated his or her age,the _____.

The insured must pay all past-due premiums and a stated amount of interest along with proof of insurability to secure reinstatement after a life insurance policy has lapsed.

_____ bars an insurer from challenging its liability on a policy on the basis of an insured's misrepresentations if the policy has been in force for a specified period of time.

Health insurance policies generally require the insured to pay up to a certain amount each year after the insurer's payment obligation begins.

Describe portable health insurance.

Flood-related damage to property is an example of a(n)_____.

Douglas obtained a $100,000 insurance policy on his warehouse.The policy contained an 80 percent coinsurance clause.An accidental fire totally damaged the building that had a fair market value of $250,000 at the time of the loss.How much will Douglas recover from his insurance company?

If Geoff makes a fraudulent statement about his medical history and fails to disclose relevant facts about his medical history in his application for insurance,the insurance company _____.

In life insurance policies,the person who purchases the policy must have an insurable interest in the life being insured at the time the loss occurs,not at the time the policy was issued.

What are an insurer's obligations in a liability insurance contract?

According to the _____,when the insured has purchased insurance policies from more than one insurer,the loss will be apportioned among the insurance companies.

Which of the following statements is true about health insurance contracts?

_____ generally require that the insured pay a deductible each year before the insurer's payment obligation begins.

The insurer may not exercise a right of subrogation if it is required to pay for the loss of property under a fire insurance contract.

Flood-related damage to property is a common excluded peril in property insurance contracts.

Describe the insurable interests required in life and property insurance.

Property insurance policies are generally nonassignable.

A warranty is an implied condition of an insurance contract.

An important distinction between valid insurance contracts and wagering contracts is that:

As a general rule,if an applicant suffers a loss after applying but before the insurer formally accepts the application:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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