#1
What is the primary purpose of insurance?
To generate profit for the insurance company
To provide financial protection against risks
To regulate financial markets
To promote government revenue
#2
What is a 'rider' in insurance?
A person who rides a motorcycle covered by insurance
An additional provision or amendment to an insurance policy that adds or modifies coverage
A type of insurance policy for equestrian activities
A term used for policyholders with multiple insurance policies
#3
In health insurance, what is a 'pre-existing condition'?
A medical condition that existed before the effective date of the insurance policy
A condition that develops after obtaining the insurance coverage
A condition that is specifically covered by the insurance policy
A condition excluded from all health insurance policies
#4
What is 'loss of use' coverage in property insurance?
Coverage for damage to personal belongings
Coverage for loss of rental income due to property damage
Coverage for legal expenses in case of a lawsuit
Coverage for losses resulting from business interruptions
#5
In property insurance, what does 'actual cash value' refer to?
The current market value of the insured property without depreciation
The replacement cost of the insured property
The maximum amount the insurance company will pay for a covered loss
The insured's contribution to the overall value of the property
#6
What is the purpose of an insurance policy's 'declaration page'?
To declare the insurer's profitability for the fiscal year
To provide a summary of key information about the insurance policy
To declare the insured's commitment to following safety guidelines
To declare the insurance company's financial stability
#7
Which regulatory body oversees insurance companies in the United States?
SEC (Securities and Exchange Commission)
FDIC (Federal Deposit Insurance Corporation)
NAIC (National Association of Insurance Commissioners)
FCA (Financial Conduct Authority)
#8
What is a deductible in insurance?
The amount the insured must pay out-of-pocket before the insurance coverage kicks in
The maximum amount an insurance company will pay for a covered loss
The premium paid monthly for insurance coverage
The percentage of the insured value covered by the policy
#9
What is the role of an insurance underwriter?
To sell insurance policies to customers
To assess and evaluate risks to determine policy eligibility and premium rates
To investigate insurance claims
To manage the financial investments of an insurance company
#10
What is the difference between 'term life' and 'whole life' insurance?
Term life has a fixed coverage period, while whole life provides coverage for the entire lifetime
Term life covers only accidental deaths, while whole life covers all causes of death
Term life has higher premiums than whole life
Whole life insurance is only available for seniors
#11
What does 'underinsured motorist coverage' protect against?
Damage to the insured vehicle caused by an uninsured driver
Medical expenses for injuries sustained in an accident with an underinsured driver
Liability for injuries caused by the insured driver
Damage to the insured vehicle caused by the insured driver's negligence
#12
What is the purpose of the National Flood Insurance Program (NFIP) in the United States?
To provide insurance coverage for floods caused by natural disasters worldwide
To regulate insurance premiums for homeowners
To offer flood insurance to property owners in participating communities
To exclude flood coverage from all insurance policies
#13
What does 'subrogation' mean in insurance terms?
The process of settling a claim with the policyholder
The transfer of legal rights and responsibilities from one party to another
The assessment of risk by an insurance underwriter
The insurer's right to pursue legal action against a third party responsible for a loss to the insured
#14
In insurance, what is 'reinsurance' used for?
To provide coverage for high-risk individuals
To transfer a portion of the risk from the primary insurer to another insurer
To determine the value of an insured property
To regulate premium rates in the insurance market
#15
What is 'coinsurance' in property insurance?
The sharing of insurance coverage between multiple policyholders
The insured's share of covered expenses after the deductible is met
The use of physical coins as a form of insurance premium payment
The requirement for policyholders to carry coins as part of their insurance documentation
#16
What is 'moral hazard' in insurance?
The risk associated with immoral behavior of policyholders
The increased risk of loss due to the insured's unethical actions
The risk that policyholders may intentionally cause a loss to claim insurance benefits
The tendency of policyholders to overestimate the value of their insured property
#17
What is 'adverse selection' in the context of insurance?
The selection of insurance policies with favorable terms
The tendency for high-risk individuals to seek insurance more than low-risk individuals
The process of selecting an insurance agent based on customer reviews
The selection of insurance policies without proper consideration of coverage
#18
What does the '30-day grace period' in insurance refer to?
A period during which policyholders can cancel their insurance policy without penalty
A period during which the insured can delay filing a claim
A period during which the insurer can revise premium rates
A period after the due date during which the policy remains in force despite non-payment of the premium