FIN 106 CBT PRACTICE

1. Which characteristic is not true about risk?

2. Under the principle of utmost good faith, what is required from the insured?

3. Which type of risk affects the entire economy and cannot be avoided through diversification?

4. What is the main function of insurance?

5. Which of the following is NOT typically covered by a personal accident insurance policy?

6. Annuities provide a series of guaranteed payments for what durations?

7. Pure risk involves probabilities of what kind of outcomes?

8. In an insurance contract, who is considered the insured?

9. In the principle of subrogation, which of the following statements is true?

10. What is the term used to describe the condition that increases the chances of loss or severity of loss?

11. Insurance involves an arrangement where the insurer promises to pay a sum of money if the insured suffers financial loss. What is the price charged by the insurer called?

12. What principle allows an insurer to place itself in the insured’s position after paying a claim?

13. What is the main function of insurance?

14. Term assurance provides benefits under which condition?

15. Which type of risk involves the possibility that external sources of finance may not be available when needed?

16. Which type of insurance policy provides financial protection against damage from traffic collisions and theft?

17. Diversifiable risk can be avoided and affects what size of entities?

18. Which of the following is a characteristic of pure risk?

19. Which type of life insurance provides for the payment of a specified sum of money to named beneficiaries on the death of the insured, regardless of when the death occurs?

20. According to the transfer device school of thought, what is the primary business of the insurer?

21. Strategic risk can arise in a firm when what happens?

22. Which condition is NOT necessary for a right of contribution among insurers?

23. According to the combination school of thought, what completes the definition of insurance?

24. Which principle ensures that an insured does not profit from their loss but is restored to their former position?

25. Which intermediary has the capacity to bind the principal (insurer) in transactions with third parties?

26. Which insurance policy covers the insured vehicle against damage from traffic collisions, theft, and fire?

27. Which of the following types of life assurance policies provides a benefit only if the insured dies during a specified term?

28. What is the duty of the insured regarding the principle of utmost good faith?

29. What must be present in a marine insurance policy for a claim to be valid?

30. Who usually receives the claim payment in an insurance policy?

31. Which type of risk is associated with fluctuations in foreign exchange rates?

32. Which type of insurance requires the insurable interest to be present both at the time of entering the transaction and at the time of the claim?

33. Which of the following individuals would most likely be classified under the high-risk category for personal accident insurance?

34. What is the principle of utmost good faith (uberrimae fidei) in insurance contracts?

35. What is the main function of insurance?

36. Which type of risk is associated with fluctuations in foreign exchange rates?

37. Which type of insurance covers the entire lifetime of the insured provided the minimum required premiums are paid?

38. Operational risk arises from what factors?

39. Which type of marine insurance policy provides compensation for any liability occurring on account of a ship crashing or colliding?

40. What kind of fraud involves the insured exaggerating the extent of the risk or damage?