CPCU 500, Chapter 4 Exam | Questions with 100%
Correct Answers | Verified | Latest Update
2026/2027
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Practice questions for this set
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The process of creating a marketable insurance-linked security based on the
cash flows that arise from the transfer of insurance risks
Choose an answer
1 Insurance securitization 2 Retention
3 Protected cell company (PCC) 4 Excess coverage
Don't know?
Terms in this set (30)
, Retention A risk financing technique by which losses are
retained by generating funds within the
organization to pay for the losses
Transfer In the context of risk management, a risk financing
technique by which the financial responsibility for
losses and variability in cash flows is shifted to
another party
Primary layer The first level of insurance coverage above any
deductible
Excess layer A level of insurance coverage above the primary
layer
Excess coverage Insurance that covers losses above an attachment
point, below which there is usually another
insurance policy or a self-insured retention
Umbrella policy A liability policy that provides excess coverage
above underlying policies and may also provide
coverage not available in the underlying policies,
subject to a self-insured retention
Buffer layer A level excess insurance coverage between a
primary layer and an umbrella policy
Self-insurance A form of retention under which an organization
records its losses and maintains a formal system to
pay for them
Large deductible plan An insurance policy with a deductible of at least
$100,000 or more.
Correct Answers | Verified | Latest Update
2026/2027
Save
Practice questions for this set
Learn 1 /7 Study using Learn
The process of creating a marketable insurance-linked security based on the
cash flows that arise from the transfer of insurance risks
Choose an answer
1 Insurance securitization 2 Retention
3 Protected cell company (PCC) 4 Excess coverage
Don't know?
Terms in this set (30)
, Retention A risk financing technique by which losses are
retained by generating funds within the
organization to pay for the losses
Transfer In the context of risk management, a risk financing
technique by which the financial responsibility for
losses and variability in cash flows is shifted to
another party
Primary layer The first level of insurance coverage above any
deductible
Excess layer A level of insurance coverage above the primary
layer
Excess coverage Insurance that covers losses above an attachment
point, below which there is usually another
insurance policy or a self-insured retention
Umbrella policy A liability policy that provides excess coverage
above underlying policies and may also provide
coverage not available in the underlying policies,
subject to a self-insured retention
Buffer layer A level excess insurance coverage between a
primary layer and an umbrella policy
Self-insurance A form of retention under which an organization
records its losses and maintains a formal system to
pay for them
Large deductible plan An insurance policy with a deductible of at least
$100,000 or more.
