FUNDAMENTALS OF INSURANCE (Business)
PLANNING PRACTICE EXAM QUESTIONS
CORRECTLY ANSWERED FREQUENTLY
TESTED.
Which of the following statements concerning the typical conversion
provision found in group medical expense contracts is (are) correct?
I. It allows the insurer to exclude preexisting conditions in a conversion
policy.
II. An individual normally has 31 days after termination of group coverage
to elect a conversion policy.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Group long-term care coverage differs from individual coverage in which of
the following ways?
I. Employees typically have more choice in amount and duration of
benefits under group coverage.
II. The cost of group coverage is usually less than the cost of individual
coverage.
A. I only
B. II only
,C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Which of the following statements concerning the usual coordination-of-
benefits (COB) provision in group medical expense plans is (are) correct?
I. Coverage as a retired employee is primary to coverage as an active
employee.
II. Coverage as an active employee is primary to coverage as a dependent.
A I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Which of the following statements concerning business overhead
insurance is (are) correct?
I. These policies provide funds that can be used to cover many of the
ongoing costs of operating a business while the owner is totally disabled.
II. These policies tend to have benefit durations of 5 years or more and
have fairly long waiting periods.
A. I only
B. II only
C. Both I and II
,D. Neither I nor II
Verified Answer -A. I only
Which of the following statements concerning the settlement options in a
whole life insurance policy is (are) correct?
I. The policyowner must select a settlement option when applying for
insurance.
II. Settlement options provide alternative methods for distributing the
policy's death benefit.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Beth faces the risk that her car could run into someone else's car as a result
of her negligence. If that happens, Beth would have to pay the costs of
repairing the other car. This risk can be categorized as which of the
following?
I. A liability risk
II. A speculative risk
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -A. I only
, The key employees of a sole proprietorship are logical choices to be
purchasers of the business at the sole proprietor's death for which of the
following reasons?
I. They are familiar with the business.
II. They want to protect their own future employment.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -C. Both I and II
Which of the following statements concerning the use of Medicaid to meet
long-term care needs is (are) correct?
I. It is available only if a person is poor or has a low income and has
exhausted most other assets.
II. It eliminates the social stigma of accepting welfare.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -A. I only
Which of the following statements concerning the trust endorsement to a
personal auto policy (PAP) is (are) correct?
PLANNING PRACTICE EXAM QUESTIONS
CORRECTLY ANSWERED FREQUENTLY
TESTED.
Which of the following statements concerning the typical conversion
provision found in group medical expense contracts is (are) correct?
I. It allows the insurer to exclude preexisting conditions in a conversion
policy.
II. An individual normally has 31 days after termination of group coverage
to elect a conversion policy.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Group long-term care coverage differs from individual coverage in which of
the following ways?
I. Employees typically have more choice in amount and duration of
benefits under group coverage.
II. The cost of group coverage is usually less than the cost of individual
coverage.
A. I only
B. II only
,C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Which of the following statements concerning the usual coordination-of-
benefits (COB) provision in group medical expense plans is (are) correct?
I. Coverage as a retired employee is primary to coverage as an active
employee.
II. Coverage as an active employee is primary to coverage as a dependent.
A I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Which of the following statements concerning business overhead
insurance is (are) correct?
I. These policies provide funds that can be used to cover many of the
ongoing costs of operating a business while the owner is totally disabled.
II. These policies tend to have benefit durations of 5 years or more and
have fairly long waiting periods.
A. I only
B. II only
C. Both I and II
,D. Neither I nor II
Verified Answer -A. I only
Which of the following statements concerning the settlement options in a
whole life insurance policy is (are) correct?
I. The policyowner must select a settlement option when applying for
insurance.
II. Settlement options provide alternative methods for distributing the
policy's death benefit.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -B. II only
Beth faces the risk that her car could run into someone else's car as a result
of her negligence. If that happens, Beth would have to pay the costs of
repairing the other car. This risk can be categorized as which of the
following?
I. A liability risk
II. A speculative risk
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -A. I only
, The key employees of a sole proprietorship are logical choices to be
purchasers of the business at the sole proprietor's death for which of the
following reasons?
I. They are familiar with the business.
II. They want to protect their own future employment.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -C. Both I and II
Which of the following statements concerning the use of Medicaid to meet
long-term care needs is (are) correct?
I. It is available only if a person is poor or has a low income and has
exhausted most other assets.
II. It eliminates the social stigma of accepting welfare.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Verified Answer -A. I only
Which of the following statements concerning the trust endorsement to a
personal auto policy (PAP) is (are) correct?
