INS test 41) Which of the following statements is (are) true with respect to annuities? I. Annuities are the opposite of life insurance. II. The fundamental purpose of annuities is to replace lost income in case of premature death. A) I only B) II only C)
12) Insurers offering variable annuities charge a number of expenses. One category of expenses is to pay the fund manager and to pay brokerage fees. This expense is the A) investment management charge. B) administrative charge. C) surrender charge. D) front-end load.
A
8) Section II of the homeowners policy has exclusions applying to all of the following EXCEPT A) activities of the named insured's minor children. B) business activities. C) transmission of a communicable disease.
A
15) Which of the following statements about the additional coverages included in Section II of the homeowners policy is true? A) Damage to property of others is covered only if the insured is legally liable. B) Damage to property arising out of a business engaged in by the insured is covered. C) Interest that accrues on a judgment after the judgment is awarded but before the judgment is paid is covered under claims expenses. D) First aid expenses incurred by the insured for a bodily injury covered under the policy are not covered.
C
19) Factors that affect the cost of homeowners insurance include which of the following? I. Construction material II. Deductible amount A) I only B) II only C) both I and II D) neither I nor II
C
3) Life annuity payments are made up of all of the following EXCEPT A) return of premiums. B) interest earnings. C) unliquidated principal of annuitants who live too long. D) unliquidated principal of annuitants who die early.
C
29) Which of the following persons can establish a traditional IRA? I. A person whose only income received is from investments. II. A 75 year-old man who has earned taxable income. A) I only B) II only C) both I and II D) neither I nor II
D
15) Which of the following statements is (are) true with respect to an equity-indexed annuity? I. The maximum percentage gain is usually capped. II. There is no downside protection against loss of principal if the annuity is held to term. A) I only B) II only C) both I and II D) neither I nor II
A
1) Which of the following statements is (are) true with respect to annuities? I. Annuities are the opposite of life insurance. II. The fundamental purpose of annuities is to replace lost income in case of premature death. A) I only B) II only C) both I and II D) neither I nor II
A
11) Which of the following statements about the coverage for other structures (Coverage B) under the Homeowners 3 policy is true? A) The coverage applies to a detached garage or tool shed on the residence premises. B) Structures attached to the dwelling by a fence or utility line are considered to be part of the dwelling rather than other structures. C) Coverage applies even if the other structure is used for business purposes. D) There is no coverage for a private garage if it is rented to a tenant of the dwelling.
A
16) Which of the following statements about coverage for loss of use (Coverage D) under the Homeowners 3 policy is true? A) If a covered loss makes the home unfit for living, the insurer pays additional living expenses the insured may incur as a result of the loss. B) The duration of payments for additional living expenses is limited to a maximum of 30 days. C) There is no coverage for loss of rent if an insured peril makes the part of the premises rented to others uninhabitable. D) There is coverage for loss of business income if an insured peril forces a home business to be terminated.
A
17) Which of the following statements about the additional coverages under Section I of the Homeowners 3 policy is true? A) There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs. B) There is unlimited coverage for furnishings of the landlord in an apartment on the premises that is rented to others. C) Property removed from the premises because it is endangered by an insured peril is covered on a named-perils basis while it is outside the insured premises. D) There is no coverage for the increased cost of construction or repair to comply with an ordinance or law.
A
20) Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). Assume that Juanita receives 12 monthly payments of $500 the first year. How much taxable income must she report? A) $3,000 B) $4,000 C) $4,500 D) $6,000
A
20) Which of the following statements about endorsements to the homeowners policy is (are) true? I. The purpose of the inflation guard endorsement is to help prevent home owners from being under-insured. II. The purpose of the watercraft endorsement is to provide coverage for watercraft when they are used outside the United States. A) I only B) II only C) both I and II D) neither I nor II
A
21) Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true? A) Theft losses to boats and watercraft are covered only if they occur at the insured's residence. B) Damage from an explosion is covered only if the explosion is the result of fire or lightning. C) Property damage from vehicles is covered only if it is caused by the insured. D) Smoke damage is covered only if it arises from agricultural or industrial operations.
A
22) Which of the following statements about an earthquake endorsement for a homeowners policy is (are) true? I. The endorsement also covers landslides and volcanic eruptions. II. The coverage for earthquakes is written without a deductible. A) I only B) II only C) both I and II D) neither I nor II
A
23) Which of the following is a permissible IRA investment alternative? A) mutual funds B) fine art C) antiques D) life insurance
A
25) Which of the following losses would be covered under Section II of an unendorsed Homeowners 3 policy? A) The homeowner accidentally dropped a bowling ball, injuring another bowler's foot. B) The homeowner's nanny was injured on her day off while hiking at a state park. C) The insured slandered a city council member at a city council meeting. D) The homeowner's dog bit the homeowner's daughter.
A
29) All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT A) to reimburse the insurer for any loss payments. B) to notify the insurer of any change in ownership of the property of which the mortgagee is aware. C) to provide a proof of loss form if the insured fails to do so. D) to pay the premium if the insured fails to do so.
A
3) Which of the following statements about the Homeowners 6 (unit-owners form) policy is true? A) It includes personal liability coverage. B) It covers personal property on an open-perils basis. C) It covers the dwelling on an open-perils basis. D) It is designed for tenants who rent an apartment or a home.
A
30) Donna, age 50, is single and earns $40,000 annually. She is covered under her employer's retirement plan. Donna would like to start a traditional IRA and contribute $4,000 this year. Which of the following describes her ability to establish a traditional IRA and the tax treatment of her contribution? A) Her contribution is fully tax deductible. B) Her contribution is partially tax deductible. C) No portion of the contribution is tax deductible. D) Donna is not eligible to establish a traditional IRA, so no contribution can be made.
A
33) Which of the following statements regarding individual retirement accounts (IRAs) is (are) true? I. If an individual's only income during the year is from investments, he or she cannot make an IRA contribution. II. The funds in the IRA can be used to purchase life insurance on the owner. A) I only B) II only C) both I and II D) neither I nor II
A
4) Stan paid an insurance company $50,000 for a fixed annuity when he was 50 years old. At age 62, Stan plans to begin to receive payments from the insurer. There are no guarantees on the number of payments he will receive. Based on the description provided, this annuity can be described as a(n) A) deferred annuity. B) life annuity with guaranteed payments. C) immediate annuity. D) variable annuity.
A
6) Which of the following statements is (are) true with respect to a joint-and-survivor annuity? I. Some joint-and-survivor annuities reduce the income payment after the first annuitant dies. II. No payments are made after the first annuitant dies. A) I only B) II only C) both I and II D) neither I nor II
A
7) The major difference between the dwelling coverage (Part A) of the Homeowners 2 (Broad From) policy and the Homeowners 3 (Special Form) policy is that A) the HO-3 provides open perils ("all risks") coverage and the HO-2 provides named-perils coverage. B) the HO-3 provides actual cash value coverage, the HO-2 provides replacement cost coverage. C) the HO-3 is always written without a deductible, the HO-2 always written with a deductible. D) the HO-3 can be used for any type of construction, the HO-2 is limited to wood frame homes.
A
8) Brad funded a life annuity through installment payments. At age 60, he decided to elect an annuity settlement option and to begin to receive payments. Which of the following annuity payout options will provide Brad with the highest monthly income? A) life annuity (no refund) B) life income with payments guaranteed for 5 years C) life income with payments guaranteed for 10 years D) installment refund annuity
A
9) All of the following situations are excluded from coverage under Section II of the homeowners policy EXCEPT A) the rental of a spare bedroom which is used by the tenant as an office. B) the use of a rented airplane to take a vacation. C) the ownership of a ten-unit apartment house as an investment. D) the performance of professional services by the insured at the residence premises.
A
9) Section I of the Homeowners 3 policy provides coverage for which of the following? A) loss of use B) personal liability C) disability of the homeowner D) medical payments
A
25) Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true? A) It applies to personal property losses only. B) Except for small losses, the insured must repair or replace the damaged property in order to receive full replacement cost. C) The insured is required to carry an amount of insurance equal to 100 percent of the replacement value of the insured property. D) Loss settlements are equal to 50 percent of the value of the loss if the insured is carrying less than the required amount of insurance.
B
26) Daryl, age 42, quit his job. His employer offered a defined contribution pension plan, and the balance in the account was $30,000 when Daryl quit. He can avoid immediate taxation of these funds by A) taking a lump-sum distribution. B) using an IRA rollover account. C) receiving the money through four equal installments. D) using the funds to purchase common stock issued by the former employer.
B
27) Which of the following statements about the appraisal clause in the Homeowners 3 policy is (are) true? I. It is used to determine a value for personal property when the policy is issued. II. It is used to help settle disputes over the amount of a loss after a loss has occurred. A) I only B) II only C) both I and II D) neither I nor II
B
27) Which of the following statements is (are) true with regard to Roth IRAs? I. The portion of a Roth IRA distribution that is attributable to investment income is taxable. II. There is a maximum income level above which Roth IRA contributions are not allowed. A) I only B) II only C) both I and II D) neither I nor II
B
3) Which of the following statements about the personal liability coverage (Coverage E) of an unendorsed homeowners policy is true? A) Coverage is written on an accident basis. B) Coverage is provided for bodily injury liability. C) Coverage is provided for business and professional liability. D) Coverage is provided for personal injury liability.
B
30) All of the following statements about the cancellation of a Homeowners 3 policy are true EXCEPT A) The insurer may cancel a new policy for any reason if it has been in force for less than 60 days and is not a renewal policy. B) At least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium. C) A policy written for longer than 1 year can be cancelled for any reason on the anniversary date by giving the insured at least 30 days' notice of cancellation. D) After a policy has been in force for at least 60 days, it can be cancelled by the insurer if the risk has increased substantially since the policy was issued.
B
32) All of the following are circumstances under which withdrawals from a traditional IRA may be made prior to age 59.5 without incurring a substantial penalty EXCEPT A) The withdrawal is in substantially equal installments paid over the individual's life expectancy. B) The withdrawal is used to pay living expenses after unemployment insurance benefits cease. C) The distribution is to the beneficiary of a deceased IRA owner. D) The withdrawal is because of income needed due to the individual's disability.
B
4) Which of the following statements about the insurer's obligation to provide a legal defense under the personal liability coverage (Coverage E) of the homeowners policy is (are) true? I. The insurer agrees to defend the insured only if the suit is not groundless, false, or fraudulent. II. The insurer's obligation to defend the insured ceases after the amount paid for damages from an occurrence equals the policy limit. A) I only B) II only C) both I and II D) neither I nor II
B
5) Cassie, age 62, paid a life insurer $100,000 in exchange for a life annuity. If Cassie dies before receiving 120 monthly payments from the insurer, the remaining payments will be made to a beneficiary. If Cassie dies after receiving 120 payments, no additional payments are made by the insurer. The annuity option Cassie selected it A) life annuity, no refund. B) life annuity with period certain. C) installment refund annuity. D) cash refund annuity.
B
5) Which of the following statements about the coverage for medical payments to others (Coverage F) under the homeowners policy is true? A) Medical payments may be made for any resident of the named insured's household. B) Medical expenses incurred within 3 years of an accident are covered. C) Medical payments are made only if the insured is not legally liable. D) Covered medical expenses are limited to emergency room charges.
B
1) All of the following persons are insured for personal liability under the homeowners policy EXCEPT A) children of the named insured under age 24 who are attending college full time and temporarily residing elsewhere. B) foster children under the age of 21 who reside with the named insured. C) nonresident employees of the named insured. D) the spouse of the named insured if a resident of the same household.
C
10) Which of the following statements is (are) true with respect to variable annuities? I. The price at which accumulation units can be purchased fluctuates during the funding period. II. The value of annuity units fluctuates over time. A) I only B) II only C) both I and II D) neither I nor II
C
13) Insurers offering variable annuities charge a number of fees and expenses. One category of fees and expenses is charged to cover the cost of record keeping, paperwork, and periodic reports to annuity owners. This expense is the A) investment management charge. B) surrender charge. C) administrative charge. D) front-end load.
C
13) Which of the following statements about the personal property coverage (Coverage C) of the Homeowners 3 policy is (are) true? I. There are special limits of liability that apply to certain types of personal property. II. The full amount of coverage applies only if the property is permanently located at any residence of the insured. A) I only B) II only C) both I and II D) neither I nor II
C
14) The Homeowners 3 policy limits the amount of coverage provided on certain personal property (e.g. coin collections and silverware). This personal property can be adequately insured by A) lowering the deductible which applies to personal property losses. B) storing the property away from the home at another location. C) adding a schedule to the policy listing the property with specific amounts of insurance. D) adding an appraisal clause to the policy.
C
17) Liability arising out of which of the following is covered under the personal injury endorsement to the homeowners policy? A) bodily injury B) property damage C) slander D) professional liability
C
18) All of the following are additional coverages under Section I of the Homeowners 3 policy EXCEPT A) the reasonable expenses of removing debris after an insured loss. B) fire department service charges for which the insured is liable by contract or agreement. C) damage to trees and shrubs caused by a windstorm. D) losses incurred from the unauthorized use of a stolen credit card.
C
19) Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). What is the exclusion ratio in this case? A) 33.33 percent B) 40.00 percent C) 50.00 percent D) 66.67 percent
C
19) Which of the following is a covered peril under the personal property coverage (Coverage C) of an unendorsed Homeowners 3 policy? A) earthquake B) nuclear radiation C) windstorm D) flood
C
26) David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling, which has a current replacement value of $400,000. Ignoring any deductible, how much will David collect if a roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire? A) $10,000 B) $12,000 C) $14,000 D) $16,000
C
26) Tom is planning to build a home. He is weighing many factors, including construction materials, location, and other considerations. Which of the following statements is true with regard to homeowners insurance and Tom's new home? A) The higher the construction costs are in the area, the lower Tom's homeowners insurance premiums will be. B) The lower the homeowners deductible selected, the lower the premium will be. C) Older homes cost more to insure than newer homes. D) A wood frame home costs less to insure than a brick home.
C
27) Robert purchased an unendorsed Homeowners 3 policy. He is concerned that if his personal property is destroyed, the insurer will take depreciation into consideration when determining the loss settlement and will pay him less than the amount needed to purchase new property. Which endorsement can Robert add to his Homeowners 3 policy to address this concern? A) inflation guard endorsement B) personal injury endorsement C) personal property replacement cost endorsement D) earthquake endorsement
C
31) Which of the following statements about the withdrawal of funds from a traditional IRA is true? A) Withdrawals of deductible contributions between the ages of 59.5 and 65 are subject to a tax penalty unless they are withdrawn because of specified circumstances such as death or long-term disability. B) Amounts attributable to nondeductible contributions are fully taxable as ordinary income when received. C) Withdrawals must begin no later than April 1 of the year following the calendar year in which an individual attains age 70.5. D) Withdrawals must be taken in the form of an annuity.
C
6) Which of the following persons is (are) eligible for benefits under medical payments to others (Coverage F) of the homeowners policy? I. A friend who slips and falls on a wet patio while visiting the named insured II. A neighborhood child who is severely scratched by a cat in the care of the named insured A) I only B) II only C) both I and II D) neither I nor II
C
8) Persons insured under Section I of the Homeowners 3 policy include which of the following? I. A spouse of the named insured if living in the same household II. The named insured's children who are under age 24 and who are full-time college students A) I only B) II only C) both I and II D) neither I nor II
C
9) Which of the following statements is (are) true with respect to the cash annuity settlement option? I. The taxable portion of the distribution is subject to federal and state income taxes. II. The option results in adverse selection against the insurer as those in poor health are more likely to take cash than to annuitize the funds. A) I only B) II only C) both I and II D) neither I nor II
C
12) Which of the following situations would be covered under Section II of a homeowners policy? I. The insured is sued by his girlfriend because he infected her with the AIDS virus. II. The insured's son is sued after a friend suffered serious injury as a result of using illegal drugs sold to him by the son. A) I only B) II only C) both I and II D) neither I nor II
D
13) For which of the following situations would there be personal liability coverage under the homeowners policy? I. The named insured accidentally injures her husband with a hammer. II. The named insured breaks his wife's valuable vase while practicing his golf swing. A) I only B) II only C) both I and II D) neither I nor II
D
17) Under an equity-indexed annuity, what name is given to the percentage increase in the stock index that is credited to the contract? A) the expense rate B) the exclusion ratio C) the indexing method D) the participation rate
D
2) Persons insured for personal liability under the homeowners policy include which of the following? I. Relatives while visiting the named insured. II. Overnight guests who are not relatives of the named insured. A) I only B) II only C) both I and II D) neither I nor II
D
2) When selling life annuities, what risk is the insurer pooling? A) bad investment performance B) premature death C) bad expense experience D) excessive longevity
D
4) Which homeowners policy is designed for the tenants of a rented premises? A) Homeowners 2 B) Homeowners 4 C) Homeowners 6 D) Homeowners 8
B
20) Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy? A) smoke damage resulting from agricultural operations of a neighboring farmer B) damage to the structure caused by a flash flood C) damage to the structure caused by the weight of heavy snow on the roof D) damage to a floor caused by water backing up through a sewer pipe
C
21) Which of the following statements about buying homeowners insurance is true? A) There is no reason to carry insurance for more than 80 percent of a dwelling's replacement cost. B) The deduction for depreciation will be increased if a personal property replacement cost endorsement is purchased. C) Premiums often can be reduced substantially by selecting a higher deductible. D) There is little reason to compare cost since the lack of competition results in little price variation among companies.
C
24) Which of the following is (are) included among the duties of an insured following a loss covered under the Homeowners 3 policy? I. To file a proof of loss within a specified time period after the insurer's request II. To prepare an inventory of damaged personal property A) I only B) II only C) both I and II D) neither I nor II
C
22) Which of the following types of water damage is covered under an unendorsed Homeowners 3 policy? A) damage from a flood caused by torrential rain B) damage from water backing up through a drain C) damage from water below the surface of the ground that seeps into a basement D) damage from water that overflows from a malfunctioning washing machine
D
23) Which of the following statements about the personal property replacement cost endorsement used with the homeowners policy is (are) true? I. The damaged or destroyed property must be repaired or replaced, no matter the size of the loss. II. It is designed primarily for antiques and fine art. A) I only B) II only C) both I and II D) neither I nor II
D
25) Rita is 66 years old. She earned $20,000 this year working part-time at a store and her modified adjusted gross income was $28,000. Rita is considering making a $3,000 contribution to her traditional IRA. Which of the following statements is true regarding this contribution? A) Rita cannot contribute to her traditional IRA because she is over age 65. B) Rita can make a $3,000 contribution to her traditional IRA, but it is not tax deductible. C) Rita can make a $3,000 contribution to her traditional IRA, but it is only partially tax deductible. D) Rita can make a $3,000 contribution to her traditional IRA, and it is fully tax deductible.
D
28) All of the following statements about traditional and Roth IRAs are true EXCEPT A) Traditional IRA contributions may be fully, partially, or not income tax deductible. B) Qualified distributions from Roth IRAs are received income tax free. C) Contributions to Roth IRAs are made with after-tax dollars. D) Traditional IRAs are exempt from the penalty tax on premature distributions.
D
28) Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT A) paying the claim in cash. B) replacing the property. C) repairing the property. D) paying the claim with insurance company stock.
D
24) Which of the following statements about the scheduled personal property endorsement to the homeowners policy is (are) true? I. It provides named-perils coverage on scheduled items. II. It can be used to insure valuable items such as jewelry, silverware, and coin collections. A) I only B) II only C) both I and II D) neither I nor II
B
10) All of the following are covered under the dwelling coverage (Coverage A) of the Homeowners 3 policy EXCEPT A) any structure attached to the dwelling. B) the land on which the insured dwelling is located. C) materials and supplies intended for alteration or repair of the dwelling. D) materials and supplies intended for construction of a detached garage.
B
10) Which of the following situations is covered under Section II of an unendorsed homeowners policy? A) injuries which occur at a park resulting from a motorcycle owned by the insured B) injuries resulting from an auto not subject to registration because it is in dead storage C) injuries resulting from an auto rented by the insured while on a vacation D) injuries resulting from a trailer being pulled by the insured's auto
B
11) Which of the following statements regarding watercraft liability under Section II of an unendorsed HO-3 policy is (are) true? I. No coverage is available for watercraft liability. II. Liability arising out of the use of watercraft that are under certain length and horsepower limits is covered. A) I only B) II only C) both I and II D) neither I nor II
B
14) All of the following are exclusions in the homeowners policy that apply to medical payments to others (Coverage F) EXCEPT A) bodily injury resulting from nuclear radiation. B) bodily injury to persons who are social guests at the insured location. C) bodily injury to persons eligible to receive workers compensation benefits. D) bodily injury to residents of the household who are in the care of an insured.
B
14) Which of the following statements about variable annuities is true? A) The periodic payments received by the annuitant are fixed. B) Variable annuities typically provide a guaranteed death benefit payable to a beneficiary if the annuitant dies prior to retirement. C) Insurers offering variable annuities are not permitted to charge administrative fees. D) Although the value of annuity units fluctuates, accumulation
B
15) Which of the following property is covered under the personal property coverage (Coverage C) of the Homeowners 3 policy? A) a pet dog owned by the named insured B) a bicycle owned by a foster child living with the named insured C) a motor vehicle owned by the named insured D) a stamp collection insured under a separate policy
B
16) Which of the following statements about the additional coverage for damage to property of others in Section II of the homeowners policy is true? A) The maximum amount of coverage is $25,000 per occurrence. B) Payments are made on the basis of the replacement cost of the damaged property. C) There is coverage for property damage arising out of a business engaged in on a full-time basis by an insured. D) There is coverage for intentional property damage by any insured who is a teenager.
B
16) With an equity-indexed annuity, what name is given to the method of crediting excess interest to the annuity? A) the capitation method B) the indexing method C) the distribution method D) the earnings method
B
18) Liability arising out of which of the following is covered under the personal injury endorsement to the homeowners policy? A) property damage liability B) false arrest C) bodily injury D) business liability
B
18) Which of the following statements regarding the taxation of individual annuities is (are) true? 4 I. The exclusion ratio is the percentage of the annuity income that is taxable. II. After the net cost of the annuity has been paid to the annuitant, the total annuity payment is taxable. A) I only B) II only C) both I and II D) neither I nor II
B
2) Which of the following statements about eligibility requirements for homeowners insurance is (are) true? I. A contract can be written on a twenty-unit apartment complex as long as the tenants are families. II. Separate forms are available for renters and condominium owners. A) I only B) II only C) both I and II D) neither I nor II
B
22) Which of the following statements is (are) true regarding the taxation of distributions from individual annuities? I. Individual annuity distributions are never taxable. II. Once the annuitant has recovered the premiums he or she paid for the annuity, the entire annuity distribution is taxable. A) I only B) II only C) both I and II D) neither I nor II
B
23) Which of the following is a general exclusion under Section I of the Homeowners 3 policy? A) Water damage caused by accidental discharge from a household appliance. B) Losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss. C) Losses resulting from a power failure caused by an insured peril at the residence premises. D) Losses due to a windstorm.
B
24) Which of the following statements is (are) true regarding the Roth IRA? I. Roth IRA contributions are tax deductible. II. Roth IRA investment income accumulates income-tax free. A) I only B) II only C) both I and II D) neither I nor II
B
1) Which of the following statements is (are) true regarding renters insurance? I. Renters insurance is needed if you rent a house, but is not needed if you rent an apartment. II. The ISO renter's policy provides open perils ("all-risks") coverage on the insured's personal property. A) I only B) II only C) both I and II D) neither I nor II
D
11) Bridget started to fund a variable annuity. Three years later, she experienced financial difficulty. She called her agent and cancelled the contract. The insurer returned all but 4 percent of the account balance. The 4 percent kept by the insurer is a(n) A) account administration fee. B) investment management fee. C) front-end load. D) surrender charge.
D
12) All of the following losses are subject to special limits of liability under the Homeowners 3 policy EXCEPT A) theft of firearms. B) destruction by fire of property used for business purposes. C) storm damage to a boat at a marina. D) furniture destroyed by a fire.
D
21) Juanita paid a life insurer $45,000 in exchange for an immediate life annuity. Juanita will receive $500 per month from the insurer, and her life expectancy is 15 years (180 months). If Juanita is alive 20 years later, how much of the $6,000 received during the year is taxable? A) nothing B) $3,000 C) $4,500 D) $6,000
D
28) Gail lives near a fault line. She added an earthquake endorsement to her Homeowners 3 policy. All of the following statements about the endorsement are true EXCEPT A) The deductible is expressed as a percentage of the coverage limit rather than as a dollar amount. B) The endorsement also covers landslides and volcanic eruptions. C) Aftershocks occurring within 72 hours of an earthquake are considered part of the same occurrence. D) The endorsement also covers flood losses.
D
5) Which of the following statements about the Homeowners 8 policy is (are) true? I. Losses to the dwelling are settled on a replacement cost basis if the dwelling is insured for its full market value. II. It is designed primarily for expensive, newer, dwellings. A) I only B) II only C) both I and II D) neither I nor II
D
6) Which of the following statements about the Homeowners 3 policy is (are) true? I. Losses to the dwelling are always settled on an actual cash value basis. II. Coverage on personal property is limited to $5,000. A) I only B) II only C) both I and II D) neither I nor II
D
7) All of the following are considered insured locations for medical payments to others (Coverage F) under a homeowners policy EXCEPT A) a new vacation home purchased by an insured during the policy period. B) a motel room where an insured is temporarily residing. C) a hall rented by the insured for her daughter's graduation party. D) farmland owned by the insured.
D
7) During the funding period, the premiums paid for a variable annuity are used to purchase A) annuity units. B) immediate participation shares. C) mutual fund shares. D) accumulation units.
D