Final Exam RMI Question and answers
correctly solved
Which of the following is a basic characteristic of insurance?
A) pooling of losses
B) avoidance of risk
C) payment of intentional losses
D) certainty about specific losses that will occur
Answer: A
2
Which of the following is implied by the pooling of losses?
A) sharing of losses by an entire group
B) inability to predict losses with any degree of accuracy
C) substitution of actual loss for average loss
D) increase of objective risk
Answer: A
3
According to the law of large numbers, what happens as the number of
exposure units increases?
A) Actual results will increasingly differ from probable results.
B) Actual results will more closely approach probable results.
C) Nondiversifiable risk will decrease.
D) Objective risk will increase.
Answer: B
4
,According to the law of large numbers, what should happen as an insurer
increases the number of units insured?
A) The amount the insurer expects to pay in claims should de - correct
answer ✔hello
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 - correct answer ✔D) neither I nor II
1) Which of the following types of families is likely to have the least need for a
large amount of life insurance?
A) a blended family
B) a traditional family
C) a single person family
D) a sandwiched family - correct answer ✔C
Traditionally, risk has been defined as
A) any situation in which the probability of loss is one.
B) any situation in which the probability of loss is zero.
C) uncertainty concerning the occurrence of loss.
D) the probability of a loss occurring.
Answer: C
,2
Objective risk is defined as
A) the probability of loss.
B) the relative variation of actual loss from expected loss.
C) uncertainty based on a person's mental condition or state of mind.
D) the cause of loss.
Answer: B
3
An insurance company estimates its objective risk for 10,000 exposures to be
10 percent. Assuming the probability of loss remains the same, what would
happen to the objective risk if the number of exposures were to increase to 1
million?
A) It would decrease to 1 percent.
B) It would decrease to 5 percent.
C) It would remain the same.
D) It would increase to 20 percent.
Answer: A
4
Uncertainty based on a person's mental condition or state of min - correct
answer ✔hello
1) Which of the following statements about the ownership of a life insurance
policy is (are) true?
I. Under the ownership clause, the policyowner and beneficiary equally share
all contractual rights in the policy while the insured is living.
II. The policyowner can designate a new owner by filing an appropriate form
with the insurance company.
A) I only
, B) II only
C) both I and II
D) neither I nor II
Answer - correct answer ✔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. -
correct answer ✔C) nonresident employees of the named insured.
Risk management is concerned with
A) the identification and treatment of loss exposures.
B) the management of speculative risks only.
C) the management of pure risks that are uninsurable.
D) the purchase of insurance only.
Answer: A
2
A situation or circumstance in which a loss is possible, regardless of whether
a loss occurs, is called a
A) deductible.
B) loss exposure.
C) loss avoidance.
D) peril.
correctly solved
Which of the following is a basic characteristic of insurance?
A) pooling of losses
B) avoidance of risk
C) payment of intentional losses
D) certainty about specific losses that will occur
Answer: A
2
Which of the following is implied by the pooling of losses?
A) sharing of losses by an entire group
B) inability to predict losses with any degree of accuracy
C) substitution of actual loss for average loss
D) increase of objective risk
Answer: A
3
According to the law of large numbers, what happens as the number of
exposure units increases?
A) Actual results will increasingly differ from probable results.
B) Actual results will more closely approach probable results.
C) Nondiversifiable risk will decrease.
D) Objective risk will increase.
Answer: B
4
,According to the law of large numbers, what should happen as an insurer
increases the number of units insured?
A) The amount the insurer expects to pay in claims should de - correct
answer ✔hello
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 - correct answer ✔D) neither I nor II
1) Which of the following types of families is likely to have the least need for a
large amount of life insurance?
A) a blended family
B) a traditional family
C) a single person family
D) a sandwiched family - correct answer ✔C
Traditionally, risk has been defined as
A) any situation in which the probability of loss is one.
B) any situation in which the probability of loss is zero.
C) uncertainty concerning the occurrence of loss.
D) the probability of a loss occurring.
Answer: C
,2
Objective risk is defined as
A) the probability of loss.
B) the relative variation of actual loss from expected loss.
C) uncertainty based on a person's mental condition or state of mind.
D) the cause of loss.
Answer: B
3
An insurance company estimates its objective risk for 10,000 exposures to be
10 percent. Assuming the probability of loss remains the same, what would
happen to the objective risk if the number of exposures were to increase to 1
million?
A) It would decrease to 1 percent.
B) It would decrease to 5 percent.
C) It would remain the same.
D) It would increase to 20 percent.
Answer: A
4
Uncertainty based on a person's mental condition or state of min - correct
answer ✔hello
1) Which of the following statements about the ownership of a life insurance
policy is (are) true?
I. Under the ownership clause, the policyowner and beneficiary equally share
all contractual rights in the policy while the insured is living.
II. The policyowner can designate a new owner by filing an appropriate form
with the insurance company.
A) I only
, B) II only
C) both I and II
D) neither I nor II
Answer - correct answer ✔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. -
correct answer ✔C) nonresident employees of the named insured.
Risk management is concerned with
A) the identification and treatment of loss exposures.
B) the management of speculative risks only.
C) the management of pure risks that are uninsurable.
D) the purchase of insurance only.
Answer: A
2
A situation or circumstance in which a loss is possible, regardless of whether
a loss occurs, is called a
A) deductible.
B) loss exposure.
C) loss avoidance.
D) peril.
