FPQP Module 5 insurance study Test In-Depth Examination
and 100% Correctly Verified Financial Planning Solutions
2025/2026
Which one of the following represents the best protection against financial loss suffered
due to premature death? - correct answer life insurance
Which of the following statements is correct? - correct answer Nonparticipating policies
are only sold by stock companies.
Which one of the following would not be considered an insured as described in a
personal automobile policy? - correct answer your estranged son who lives in another
state
The major problem with standard homeowners and automobile liability insurance is -
correct answer inadequate liability coverage limits.
Comprehensive personal liability insurance (umbrella policies) was designed to -
correct answer provide personal catastrophic liability protection.
The process of deciding how much and what kind of insurance to buy is called - correct
answer Insurance Management
one form of pure risk - correct answer Liability Risk
Which one of the following is not a requirement for an insurable risk from the insurance
company's perspective? - correct answer The loss must be catastrophic.
Which one of the following is a correct statement about insurable interest? - correct
answer Without the requirement of insurable interest, policy owners could unfairly profit
from insured casualties.
,Which one of the following is not one of the basic/standard sections of an insurance
policy? - correct answer riders and endorsements
Which one of the following is not one of the primary factors in determining the cost of
automobile insurance in any given state? - correct answer gas mileage of vehicle
Which one of the following statements concerning umbrella insurance coverage is
correct? - correct answer Umbrella insurance generally comes in $1 million
increments.
"Other than collision" coverage under a personal auto policy (PAP) would cover which
one of the following events? - correct answer a tree falling on a parked car in a storm.
Which one of the following statements concerning negligence is correct? - correct
answer An individual can still be sued for negligence even if he or she behaves
responsibly and hasn't done anything wrong.
Which one of the following statements is true? - correct answer A homeowners and
personal auto policy are meant to cover personal property and liability, not business
property and liability.
Katie and Dan are buying their first home. Which one of the following risks will be
facilitated when they obtain homeowners insurance? - correct answer risk transfer
Which one of the following statements is correct? - correct answer In order to avoid a
coinsurance penalty the insured must have coverage for at least 80% of their home's
replacement cost.
Which one of the following is an example of a type of speculative risk? - correct
answer stock market investment
A risk management plan can - correct answer protect against possible large losses.
,Choosing to live in a well-lit, gated community is an example of - correct answer Risk
Reduction
Which one of the following statements about insurance agents is correct? - correct
answer The insurance field has one area that deals with life and health related
coverage and another that deals with property and casualty coverage, and insurance
agents tend to work primarily in one area or the other.
The difference between an insurance agent and an insurance broker can be best
described by which one of the following statements? - correct answer An agent makes
the insurance company accountable to information given by the client to the agent.
Which one of the following perils is not covered under a typical homeowners insurance
policy? - correct answer flood
Which one of the following is not one of the rules of risk management? - correct
answer the law of large numbers
Which one of the following would be an example of a peril? - correct answer theft of
jewelry
Under a personal auto policy, which one of the following is not one of the insured's
duties after an accident? - correct answer contacting the police after any accident
Which one of the following statements about auto insurance is correct? - correct
answer Most states require liability insurance, but they do not require collision
insurance.
Which one of the following is a true statement of the differences between agents and
brokers? - correct answer most brokers cannot bind coverage with an insurance
company
, Viatication - correct answer the process whereby an insurance policy on the life of a
terminally or chronically I'll person is sold to one or more people.
Incontestability Provision - correct answer After a life insurance policy has been in
effect for two years, the company cannot claim that a statement made in the application
for instance was meant to defraud the insurer. Helps prevent untimely lawsuits and dials
for claims by the insurance company.
Reinstatement Provision - correct answer Allows policy to be reinstated within a
specified period after lapse. All overdue premiums must be paid and the insured must
provide current evidence of insurability.
Suicide Clause - correct answer Under most circumstances, coverage for suicide is
excluded during a specified period following policy inception. Normally two years but
less in some states.
Policy Loan - correct answer Policyowner may borrow money from the cash value of a
permanent life insurance policy. Technically, the policyowner borrow money from the
insurance company, using the policy as collateral. The policy's cash value determines
the loan amount available.
Policy Dividends - correct answer Also called a participating policy. They are a refund
of a portion of the premium. Divide a are based on the diff between the gross premium
charged and the actual experience of the insurer. They are not taxable.
Cash option for Policy Dividen - correct answer The insurer can send a check to the
policyowner in the amount of the dividend
Accumulate with Interest for Policy Dividend - correct answer The insurer will pay
interest on dividends in much the same way a bank pays interest on deposits. While
dividends are not taxable any interest earned would be taxable in the year received.
and 100% Correctly Verified Financial Planning Solutions
2025/2026
Which one of the following represents the best protection against financial loss suffered
due to premature death? - correct answer life insurance
Which of the following statements is correct? - correct answer Nonparticipating policies
are only sold by stock companies.
Which one of the following would not be considered an insured as described in a
personal automobile policy? - correct answer your estranged son who lives in another
state
The major problem with standard homeowners and automobile liability insurance is -
correct answer inadequate liability coverage limits.
Comprehensive personal liability insurance (umbrella policies) was designed to -
correct answer provide personal catastrophic liability protection.
The process of deciding how much and what kind of insurance to buy is called - correct
answer Insurance Management
one form of pure risk - correct answer Liability Risk
Which one of the following is not a requirement for an insurable risk from the insurance
company's perspective? - correct answer The loss must be catastrophic.
Which one of the following is a correct statement about insurable interest? - correct
answer Without the requirement of insurable interest, policy owners could unfairly profit
from insured casualties.
,Which one of the following is not one of the basic/standard sections of an insurance
policy? - correct answer riders and endorsements
Which one of the following is not one of the primary factors in determining the cost of
automobile insurance in any given state? - correct answer gas mileage of vehicle
Which one of the following statements concerning umbrella insurance coverage is
correct? - correct answer Umbrella insurance generally comes in $1 million
increments.
"Other than collision" coverage under a personal auto policy (PAP) would cover which
one of the following events? - correct answer a tree falling on a parked car in a storm.
Which one of the following statements concerning negligence is correct? - correct
answer An individual can still be sued for negligence even if he or she behaves
responsibly and hasn't done anything wrong.
Which one of the following statements is true? - correct answer A homeowners and
personal auto policy are meant to cover personal property and liability, not business
property and liability.
Katie and Dan are buying their first home. Which one of the following risks will be
facilitated when they obtain homeowners insurance? - correct answer risk transfer
Which one of the following statements is correct? - correct answer In order to avoid a
coinsurance penalty the insured must have coverage for at least 80% of their home's
replacement cost.
Which one of the following is an example of a type of speculative risk? - correct
answer stock market investment
A risk management plan can - correct answer protect against possible large losses.
,Choosing to live in a well-lit, gated community is an example of - correct answer Risk
Reduction
Which one of the following statements about insurance agents is correct? - correct
answer The insurance field has one area that deals with life and health related
coverage and another that deals with property and casualty coverage, and insurance
agents tend to work primarily in one area or the other.
The difference between an insurance agent and an insurance broker can be best
described by which one of the following statements? - correct answer An agent makes
the insurance company accountable to information given by the client to the agent.
Which one of the following perils is not covered under a typical homeowners insurance
policy? - correct answer flood
Which one of the following is not one of the rules of risk management? - correct
answer the law of large numbers
Which one of the following would be an example of a peril? - correct answer theft of
jewelry
Under a personal auto policy, which one of the following is not one of the insured's
duties after an accident? - correct answer contacting the police after any accident
Which one of the following statements about auto insurance is correct? - correct
answer Most states require liability insurance, but they do not require collision
insurance.
Which one of the following is a true statement of the differences between agents and
brokers? - correct answer most brokers cannot bind coverage with an insurance
company
, Viatication - correct answer the process whereby an insurance policy on the life of a
terminally or chronically I'll person is sold to one or more people.
Incontestability Provision - correct answer After a life insurance policy has been in
effect for two years, the company cannot claim that a statement made in the application
for instance was meant to defraud the insurer. Helps prevent untimely lawsuits and dials
for claims by the insurance company.
Reinstatement Provision - correct answer Allows policy to be reinstated within a
specified period after lapse. All overdue premiums must be paid and the insured must
provide current evidence of insurability.
Suicide Clause - correct answer Under most circumstances, coverage for suicide is
excluded during a specified period following policy inception. Normally two years but
less in some states.
Policy Loan - correct answer Policyowner may borrow money from the cash value of a
permanent life insurance policy. Technically, the policyowner borrow money from the
insurance company, using the policy as collateral. The policy's cash value determines
the loan amount available.
Policy Dividends - correct answer Also called a participating policy. They are a refund
of a portion of the premium. Divide a are based on the diff between the gross premium
charged and the actual experience of the insurer. They are not taxable.
Cash option for Policy Dividen - correct answer The insurer can send a check to the
policyowner in the amount of the dividend
Accumulate with Interest for Policy Dividend - correct answer The insurer will pay
interest on dividends in much the same way a bank pays interest on deposits. While
dividends are not taxable any interest earned would be taxable in the year received.
