1. Lucas has bought the following insurance this week:
I. A life insurance policy on his brother
II. A life insurance policy on the partner in his accounting practice
III. A fire insurance policy on the fitness club he belongs to so that if it burns down, he will receive a large enough payment to enable him to join a different club
In which of these policies does he have an insurable interest?
A. I, II, and III
B. Neither I, II, nor III
C. I and II
D. I and III
E. II and III

2. An insurance company does not violate its covenant of good faith and fair dealing if it:
A. Charges elderly customers higher premiums than it charges younger customers
B. Tells potential customers that their premiums will decline when that is not true
C. Tells potential customers that their returns on a whole life policy are certain to be higher than an equivalent amount invested in the stock market
D. Refuses to pay a valid claim until after four years of litigation
E. Refuses to accept a settlement offer on behalf of an insured that was reasonable, but not in the company’s best interest

3. If you are a smart consumer, you will:
I. Insure against as many different kinds of risks as you can so that no matter what happens, you will be protected
II. Select as low a deductible as possible so that no matter what happens, you will not have to pay large sums out of pocket
III. Buy flight insurance when you take long airplane flights so that your family will be protected if your plane crashes
A. I, II, and III
B. Neither I, II, nor III
C. I and II
D. Just I
E. Just II

4. Hamish owned an office building with a fair market value of $250,000. He insured it for $300,000. When it burned down, he was entitled to:
A. Nothing
B. $250,000 and a return of the excess premiums he paid on the $300,000 policy
C. $250,000
D. $300,000

5. Which of the following policies are you likely to need in your lifetime?
I. Service plan on an appliance
II. Whole life insurance
III. Disability insurance
IV. Health insurance
A. All of the above
B. None of the above
C. II, III, and IV
D. III and IV
E. IV