Question 1

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 2

_____ 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 clauseE) B) and D)
F) A) and C) C

Question 3

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 interestE) None of the above
F) A) and C) C

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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.E) C) and D)
F) None of the above

Question 6

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.E) None of the above
F) All of the above

Question 7

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 8

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 9

Describe portable health insurance.

Accepted Answer

Rising costs of hospitalization,medical ...

Question 10

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.E) A) and B)
F) A) and C)

Question 11

_____ 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 policiesE) A) and B)
F) None of the above

Question 12

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

Accepted Answer

There are several general duties common ...

Question 13

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

Accepted Answer

A)   excluded peril
B)   covered peril
C)   conditional peril
D)   open perilE) A) and D)
F) B) and C)

Question 14

A warranty is an implied condition of an insurance contract.

Accepted Answer

A) True 
 B)False

Question 15

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 clauseE) B) and C)
F) A) and D)

Question 16

Describe the insurable interests required in life and property insurance.

Accepted Answer

In life insurance contracts,the required...

Question 17

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 18

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)   $250,000E) A) and B)
F) B) and C)

Question 19

Property insurance policies are generally nonassignable.

Accepted Answer

A) True 
 B)False

Question 20

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 wellE) A) and B)
F) A) and C)

Exam 37: Insurance-Part Seven Commercial Paper

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

Correct AnswerverifiedShow Answer

_____ 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.

Correct AnswerverifiedC

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Describe portable health insurance.

Correct AnswerverifiedRising costs of hospitalization,medical ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThere are several general duties common ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A warranty is an implied condition of an insurance contract.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Describe the insurable interests required in life and property insurance.

Correct AnswerverifiedIn life insurance contracts,the required...View AnswerShow Answer

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.

Correct AnswerverifiedTrue

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?

Correct AnswerverifiedShow Answer

Property insurance policies are generally nonassignable.

Correct AnswerverifiedShow Answer

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 _____.

Correct AnswerverifiedShow Answer

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C

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Rising costs of hospitalization,medical ...
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There are several general duties common ...
View Answer

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In life insurance contracts,the required...
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True

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