Questions are included in attachment, they are multiple choice:

The text suggests that insurance consumers should: A) inform themselves about the company, policy, etc. to protect their own self-interest B) rely on government regulation to protect their interest, since insurance companies and policies cannot be understood by the public C) rely on attorneys and the lawsuit process to protect themselves D) rely on self-regulation of insurance companies and the insurer's goodwill to protect their Interest All of the following are rights of insurance consumers except: A) the right to accurate information B) the right to have complaints heard C) the right to affordable prices D) the right to product development and improvement All the following are true concerning FAIR (Fair Access to Insurance Requirements) plans except: A) they are one possible solution to the insurance availability problem B) they are found in only four states C) they are designed to deal with unavailability of property insurance D) they have not been profitable in most states most years The A.M. Best Company can help you to determine which of the following about your insurer? A) Its reputation for settling claims B) Its customer service rating C) How many complaints have been filed against it D) Its financial strength rating Which of the following is a primary reason that insurance consumers are Dill well-informed? A) Insurers have not made much effort to inform consumers. B) The rewards of making informed decisions are not worth the cost of obtaining the needed information. C) State insurance regulators do not provide the needed information. D) Insurance prices are so low that most consumers do not care to be informed. Which of the following Latin terms means "to stand by decisions," and conveys the idea that court decisions set precedents? A) res ipsa loquitor B) stare decisis C) ab initio D) in hoc stare Mr. Murray has asked you to help him choose an insurance company. Which of the following criteria would you llQ1 recommend that he take into consideration? A) Insurer's financial strength B) Insurer's claims service C) Insurer's service both before and after a loss D) The recommendation of at least two different insurance agents The individual consumer must ultimately deal with several issues to make an efficient purchase in the insurance market. Which ofthe following generally should llQ1 be a major consideration? A) The type of policy covering the exposure(s) B) The maximum amount of insurance coverage C) The commission the agent will receive from the sale D) The insurance agent's expertise All the following are requirements for perfect competition except: A) a well-established regulatory environment B) numerous sellers, each holding a small market share C) numerous well-informed consumers D) a homogeneous, perfectly substitutable product The efficient insurance market requires all of the following conditions except: A) numerous sellers and buyers B) well-informed consumers C) numerous purchase substitutes (homogeneity) D) a government subsidy for lower-income citizens In choosing an insurance company, the most important factor is: A) how many dollars it pays for claims B) the amount of liquid assets the insurer has C) its financial strength D) the state in which it is domiciled Given the following choices, the best advice for purchasing automobile insurance is: A) always buy full coverage B) always buy the cheapest policy C) choose the largest deductible you can reasonably afford D) never buy auto insurance from a stock company Which of the following is true about the supply and demand curves for insurance? A) The demand for insurance is very elastic and sensitive to price. B) As price declines, the demand for insurance increases dramatically. C) The supply of insurance increases dramatically with a decrease in the price. D) Insurers will tend to reduce supply if the price is artificially increased or decreased. One of the reasons why there is not sufficient supply for high-risk insurance applicants is: A) consumers will not buy insurance if prices are increased B) the existence ofjoint underwriters associations C) regulators have limited the premiums that insurers can charge for such customers D) the number of insurance contracts written by an insurer is totally regulated Choose the true statement. A) FAIR plans were developed to provide insurance to automobile drivers when coverage is otherwise unavailable. B) FAIR plans are now found in all states. C) FAIR plans require that each property owner that requests it, be given an inspection of his property and an offer of insurance at an appropriate rate or written notice of improvements needed before insurance can be offered. D) In general, FAIR plans have shown underwriting gains in most states in most years. All of the following firms provide financial ratings of insurance companies exceJlt: A) A.M. Best B) Standard & Poor's C) Moody's D)NASD Prior to September 11, 2001, property insurance policies: A) covered terrorism B) excluded terrorism from coverage C) covered war D) were very expensive Participants in the American insurance market include all of the following except: A) insurance buyers B) insurance companies C) insurance regulators D) the FDIC In most states the insurance commissioner is: A) republican B) democrat C) appointed D) elected Stare decisis means: A) to stand by decisions B) to stand for decisiveness C) to let the thing speak for itself D) to stare indecisively CLU stands for: A) Chartered Life Underwriter B) Casualty Life Underwriter C) Claims Litigation Underwriter D) Chartered Legal Underwriter CPCU stands for: A) Certified Property and Casualty Underwriter B) Claims, Property, and Casualty Underwriter C) Chartered Property Casual Underwriter D) Chartered Professional Claims Underwriter CFP stands for: A) Chartered Financial Planner B) Certified Financial Planner C) Casualty Finance Professional D) Claims and Financial Planner Most markets involve two parties. How many does the insurance market have? A)l B)2 C)3 D)4 Moody's Investors Service provides what type of infonnation about insurers? A) Financial strength B) Average time it takes them to pay valid claims C) Daily stock price reports D) Complaint history Which of the following is nQ1 directly a subject of state insurance regulation? A) Financial solvency of insurance companies B) Trade practices of insurance companies, such as agent compensation and product pricing C) Marketing activities of insurance companies D) The rates that insurers charge for insurance Why is there unequal knowledge and bargaining power in the insurance transaction? A) The complexity of the insurance contract and the intangible nature of the product B) The insurance companies want to confuse consumers so it is difficult to make choices. C) Consumers do not receive the policy until months after the contract goes into effect. D) There is no competition in the industry, therefore the consumer is stuck with inferior products. Which of the following is llQ1 an argument for federal regulation? A) There will be substantial improvement in efficiency due to fewer jurisdictional requirements. B) There will be less influence over federal regulators by insurance companies. C) There will be more expertly trained personnel. D) It will bring more tax money to the federal government. Which of the following is a subject of state insurance regulation? A) Equal employment practices of the insurer B) Standards of financial solvency C) Business acquisition practices D) Insurance contract provisions All of the following would be paid under the PAP's Other than Collision coverage except: A) the car is sprayed with paint as it passes under a bridge being painted B) the driver of the car backs off a curb and damages the car's oil pan C) the windshield is broken by a "flying" rock D) while the insured is adjusting the carburetor, gasoline spills over the engine and causes a fire The "defense" provision of the automobile insurance contract says the insurer: A) will pay all defense costs, but those costs will reduce the limits of the policy B) will indemnitY the insured for expenses incurred as a result of hiring the insured's choice of defense attorney C) does not need the consent of the insured to settle any claim against the insured D) must investigate each and every claim The PAP coverage that pays the largest claims, and is possibly the most important coverage IS: A) other than collision B) medical payments C) liability D) collision If your car is damaged in a collision that is your fault, the PAP says: A) it is up to the insurer to have it fixed B) you must protect it from further damage C) all you have to do is notify the insurer and the insurer does the rest D) the insurer's obligation is always to replace the car Ryder has purchased Liability coverage limits of 100/200/50 on his PAP. He has an accident and fmds himselfliable for damages awarded in the following order: Bodily injury to A - $250,000 Bodily injury to B - $200,000 Bodily injury to C - $150,000 Property Damage to D - $40,000 Which of the following is true? A) Ryder's insurer will pay nothing to A. B) Ryder's insurer will pay $250,000 to A. C) Ryder's insurer will pay $I00,000 to A, $I50,000 to C, and $40,000 to D. D) Ryder's insurer will pay nothing to C. Which of the following would !lQ1 be paid for by the PAP's Other than Collision coverage? A) The insured hits a deer and damages his car. B) The car is sprayed with paint as it passes by a road construction site. C) The driver of the car hits a bird and breaks the windshield. D) A crate falls off the back of a truck and lands on the hood of the insured's car. Which one of the following is false concerning the PAP? A) A pedestrian struck by an automobile can collect under his Medical Payments coverage B) Defense, settlement, and supplementary payments are in excess of the stated limits ofliability in the PAP C) Other than Collision coverage will pay for theft of the automobile D) Medical Payments coverage will not pay for the insured's injuries if the accident is the insured's fault A tornado causes the garage to collapse on Big Wonn's car, and the damage to the car is $5,000. Big Wonn has a PAP with both Collision and Other than Collision coverages. A $200 deductible applies to the Collision coverage. There is a $0 deductible on Other than Collision coverage. How much is paid by the PAP for the tornado damage? A) $0 B) $4,000 C) $4,800 D) $5,000 Compulsory Liability Insurance laws are designed to: A) reduce automobile insurance rates B) decrease the number of people who carry automobile insurance C) reduce the number ofautomobile accidents D) force individuals to purchase auto liability insurance All of the following persons are covered under Austin's PAP except: A) Austin's wife, who borrows a neighbor's car B) Austin's son, who borrows a friend's car to get to work C) Austin, while driving a car he borrowed from his employer to run an errand D) Austin, while driving a borrowed commercial wrecker truck to tow his car to a repair garage A PAP is issued with both Collision and Other than Collision coverages. Two valuable cameras are stolen from the car. The cameras would be paid for by: A) Other than Collision coverage B) Collision coverage C) a homeowner's policy, if one is in force D) the PAP, but ONLY if there are visible signs of forcible entry on the auto Maverick challenges Iceman to a drag race across the mall parking lot. During the race, Maverick loses control of the car and collides with another vehicle, causing serious injuries to the other driver. Which of the following is a true statement regarding the PAP's treatment of this claim? A) The PAP will not cover this because it occurred on private property. B) The PAP will not cover this because it occurred while he was racing. C) The PAP will cover this because it did not occur inside a racing facility. D) The PAP will cover this because it does not in any way exclude coverage for racing. Under which of the following circumstances would Tina's PAP pay something for the loss? A) Tina borrows her neighbor's car with permission. She causes an accident and is sued for an amount LESS THAN her neighbor's limit ofliability. B) Tina borrows her neighbor's car with permission. She causes an accident and is sued for an amount MORE THAN her neighbor's limit ofliability. C) Tina regularly uses her car in a business to drive college students to the airport for $50 oneway. She causes an accident and is sued by one of her paying passengers. D) Tina is sued for causing a collision while operating a motorcycle. Which of the following coverages is provided by the PAP? A) Rental car reimbursement coverage for any car rental, regardless ofwhy the car is needed B) Liability insurance C) Medical expense for disease D) Personal property coverage BillBo's PAP has a $500 deductible for Collision and a $0 deductible for Other than Collision. BillBo collides with a wild deer, causing $6,000 ofdamage to his car. He can recover from the insurer: A) $6,000 B) $5,500 C) $6,500 D) $0 Which of the following is true regarding your PAP contract? A) Your personal property is covered while in your automobile. B) Your Medical Payments will pay for your friend's injuries suffered while slbe is occupying your car. C) If you drive a car that you do not own, you will have no coverage for anything. D) All rental cars must be declared to be insured in order to have coverage on them. Which of the following is false? A) A pedestrian who has a PAP and is injured by an automobile can collect under his own Medical Payments coverage. B) The PAP covers theft of the automobile. C) The subrogation provision of the PAP does not apply to Medical Payments coverage. D) There is no coverage for the insured while driving a rented automobile. You are in an automobile accident with an uninsured motorist, and the accident is your fault. Your Uninsured Motorist limits are 10/20 and your medical bills are $22,000.You collect from your UM coverage: A) $0 B) $10,000 C) $20,000 D) $22,000 If Moses causes a car accident, and the car he hits is driven by an insured motorist, Moses's PAP will pay for the other driver's damages: A) under coverage A, Liability B) under coverage C, Uninsured Motorist C) under both coverages A and C D) nothing since an uninsured motorist was injured In the Personal Automobile Policy, "your covered auto" includes all of the following except: A) any car listed on the declarations page B) a newly acquired auto C) your trailer, if being towed by a passenger car, pickup, panel truck, or van D) a motorcycle, just as long as it is not borrowed Which of the following claims would not be covered by the Medical Payments coverage in the PAP? A) The insured is injured because of an accident while driving his motorcycle. B) The insured is struck by a house trailer which had become unhitched from the towing vehicle. C) The insured is intentionally run over by his wife or girlfriend. D) The insured is struck as a pedestrian when the driver of a car loses control. Kristyn has a PAP with Medical Payments coverage of$5,000, and Uninsured Motorist coverage of $1 00,000/$200,000. She is hit by an uninsured motorist and suffers bodily injuries in the amount of $225,000. In total, her PAP will pay her: A) $100,000 B) $105,000 C) $205,000 D) $225,000 Which of the following is!lQt a valid reason to carry Medical Payments coverage? A) Guests injured in an automobile accident might hesitate to sue their hosts. B) A negligent host would probably feel a moral obligation to pay for medical bills for injured guests. C) To facilitate settlement for relatively small amounts of medical expense D) To provide reasonably priced health insurance for the insured and his family Uninsured Motorist coverage: A) provides first-dollar coverage for damage to the insured's own autos B) protects the insured against fmancially irresponsible drivers who have no auto liability msurance C) doubles the premium for liability coverage D) is available only to drivers with excellent driving records Which one of the following is not usually involved in the provision of funding for college expenses? A) Needs based life insurance B) Life insurance trust C) Section 529 plan D) All of the above Which of the following statements is false? A) People with a small amount of assets do not typically need a will. B) A parent can use a will to appoint a guardian for hislher children. C) A valid will can minimize probate problems. D) A legally enforceable will must be made when a person is of sound mind. Which of the following is !lQt a business use of life insurance? A) To protect a business against loss caused by the death of a key person B) To provide a means of rewarding and retaining valuable personnel C) To lower business losses when an employee is fired D) To provide some amount oflife insurance to employees All of the following are typical business uses of life insurance except: A) protect the business against loss caused by the death of a key person B) provide a means of rewarding and retaining valuable employees C) provide severance pay to employees when jobs are terminated D) protect the value of the partnership at the death of an owner/insured For which year(s) is (are) the Federal Unified Estate Taxes known? A) 2011 B) 2012 C) 2011 and 2012 D) All years after 2011 To properly handle the orderly transfer of business ownership at death, it is necessary to have: A) an unfunded buy-and-sell agreement B) a life insurance contract to fund the purchase and a buy-and-sell agreement C) a verbal understanding of the valuation method D) a verbal commitment of the heirs to sell the business Federal Estate Taxes: A) are also called uniform transfer taxes B) are different from state to state C) are levied on the fair market value of the gross estate D) are levied on the taxable estate The main financial problem associated with the early adult years is: A) compensating for loss of income to the family in the event of a premature death of main wage earner B) loss of retirement income in the event ofa premature death of main wage earner C) the problem of paying estate taxes D) providing lifelong income for the children Purchasing life insurance on the homemaker: A) makes no sense because the homemaker generates no income B) should not be done because of the moral hazard it creates in the working spouse C) makes sense in many cases due to the cost of service replacement and it would help the family maintain a "normal" lifestyle D) is very necessary when the homemaker has no minor children When a person dies, the gross estate is: A) taxed at the rate of 50% B) adjusted for certain gifts made during the decedent's lifetime C) subject to the federal estate and gift tax D) not taxed if death bed gifts are made to eligible children Which formula shows the needs based method of estimating the amount of life insurance needed? A) Life insurance needed = present value of future income B) Life insurance needed = burial + education - food - shelter C) Life insurance needed = income + social security - savings D) Life insurance needed = total needs - existing assets to meet the needs Which of the following statements is false concerning the taxation oflife insurance? A) Beneficiaries receive death benefits free from any federal taxation. B) The value of the life insurance death benefit is always included in the insured's estate. C) If a non-insured/owner dies, the value included in the decedent's estate is approximately the cash value of the insurance contract. D) Interest earned on settlement proceeds is taxable. When an insured dies with an incident of ownership in a life insurance contract: A) the face amount is included in the gross estate B) the face amount is not taxed at all due to a loophole in estate tax laws C) only the cash value at death is included in the estate D) only is taxed due to the spouse's assumed half ownership The text mentioned several reasons for purchasing "business" life insurance. Which of the following reasons was not mentioned? A) Business continuation B) Fringe benefits C) Key person insurance D) Protection from creditors' claims Which of the following would !!Q1 be considered a need in the needs-based approach? A) Burial fund B) Fund to cover the equity in the home C) College education fund D) Debt retirement fund A business firm may utilize life insurance to protect against loss caused by the death of: A) a key employee B) a limited partner, not employed by the firm C) a main supplier D) a stockholder in a public corporation Which of the following is true? A) The government discourages retirement saving by providing no tax incentives. B) To discourage the pre-retirement withdrawal of tax advantaged retirement savings plans, the government imposes a 20% early withdrawal penalty. C) To discourage the pre-retirement withdrawal of tax advantaged retirement savings plans, the government imposes a 10% early withdrawal penalty on withdrawals made before age 62. D) If a 40-year-old person becomes disabled, she may be allowed to withdraw tax advantaged savings without paying a tax penalty. Mr. & Mrs. Minetti are in their 80s. They have saved millions of dollars and need to begin taking steps to minimize their estate tax liability. They have asked you for advice, and you tell them, "Give each of your children, grandchildren, and great-grandchildren a cash gift to start spending down your estate." Is this correct? A) Yes B) No, because they still will have to pay income taxes on the gifts C) No, because they will still be subject to the uniform transfer tax D) No, because there are limits to yearly gifts A "Certified Financial Planner": A) is a widely recognized financial planning credential B) can assist people in the financial planning process C) is not an existing credential D) A and B above Sound financial planning requires a trade off between: A) risk and return alternatives B) gratification and savings C) investment and saving alternatives D) fees and returns Which of the following needs for life insurance would be considered permanent? A) Education fund for surviving children B) Income fund for surviving children C) Debt-retirement fund D) Burial fund Which of the following is one of the three largest financial problems facing middle income Americans? A) Financing a teenager's automobile B) Financing college C) Financing the income needs of a surviving spouse with children D) Financing the early working years Choose the answer that best describes the purpose of a Section 529 Plan: A) funding retirement with tax-deferred dollars B) funding retirement with completely tax-free dollars C) funding a college education D) funding retirement With respect to a trust fund, what is the role of the trustee? A) Provide the initial funding for the trust B) Receive the benefits of the trust C) Provide management of the trust's property D) Determine the beneficiary of the trust "Probate" is best-defined as: A) choosing investments for a trust fund at death B) selecting the beneficiary of a trust fund after death of the donor C) administration of an estate following death of an individual D) supervising the transfer of property at death