Ch20 Life, Fire, and Auto Insurance Verified Test Bank - Business Math Procedures 13e Test Bank with Answers by Jeffrey Slater. DOCX document preview.
Practical Business Math Procedures, 13e (Slater)
Chapter 20 Life, Fire, and Auto Insurance
1) The one receiving the insurance coverage is the insured.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
2) The beneficiary pays the insurance to the insured.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
3) The face amount is the amount stated in the policy.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
4) The premium is the payment(s) that is made to pay for the cost of an insurance policy.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
5) All premiums for universal life remain the same.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
6) Permanent protection is provided by term insurance.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
7) Term insurance would pay the face amount of the policy in case of the death of the insured.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
8) Buying flight insurance at an airport is an example of straight-life insurance.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
9) Term insurance builds up no cash value.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
10) Premiums for straight-life insurance are higher than premiums for term insurance.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
11) Twenty-payment life requires premiums for 20 years although the insured is protected till death.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
12) A 20-year endowment does not build up any cash value by the end of year 5.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
13) Universal life provides whole life protection.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
14) Nonforfeiture values could result in the insured being paid the cash value of the policy and the policy being terminated.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
15) Extended term insurance means the policy continues but at a face amount that is less than the original policy.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
16) Reduced paid-up insurance means the policy continues for life at a reduced face amount.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
17) The cash value of a life insurance policy is a cheap source of money.
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
18) The premium for fire insurance is found by the insured value divided by 100 times the table rate.
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
19) The short rate cancellation table is used if the insured cancels the policy.
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
20) If the insurance company cancels a fire insurance policy, the refund to the insured will be less than if the insured cancels the policy.
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
21) Insurance required to meet coinsurance is the coinsurance rate times the replacement value.
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
22) The actual amount of insurance carried is called the face value.
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
23) As a result of coinsurance, the insurance company might pay more than face value.
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
24) All states have the same compulsory insurance.
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
25) Compulsory liability insurance includes bodily injury and property damage.
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
26) 10/20 of bodily injury means that an insurance company will pay up to $20,000 per person up to a total of 10 people for bodily injury.
Difficulty: 2 Medium
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
27) Lowering deductibles for collision will result in increased premiums.
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
28) A falling object that dents a car would be covered under comprehensive insurance.
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
29) No-fault insurance does not reduce premiums for collision, property damage, or comprehensive.
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
30) As a result of few suits as well as high operating costs, no-fault has reduced some premium costs.
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
31) The one named in the policy to receive the insurance proceeds in case of the death of the one taking out the policy is the:
A) Insured
B) Insurer
C) Beneficiary
D) Both insured and beneficiary
E) None of these
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
32) Term insurance:
A) Is more expensive than straight life
B) Builds up cash value
C) Pays more than the face amount
D) Provides temporary protection
E) None of these
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
33) In terms of premium cost, the most expensive type of insurance is:
A) Term
B) Straight life
C) 20-payment life
D) 20-year endowment
E) None of these
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
34) Which one of the following builds up no cash value?
A) Universal life
B) Straight life
C) Term
D) 20-payment life
E) None of these
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
35) Reduced paid-up insurance:
A) Buys protection with paying new premiums
B) Continues for 20 years
C) Results in a face amount less than the original amount
D) Means original face amount is continued for a certain number of years
E) None of these
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
36) A premium for fire insurance could be lower than someone else's if:
A) Building is wood
B) Roof is not fire resistant
C) Building is close to a fire hydrant
D) Goods within store are flammable
E) None of these
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
37) If the insured cancels a fire insurance policy after seven months, the refund will be (use table in handbook):
A) 67%
B) 7/12 of policy
C) 5/12 of policy
D) 33%
E) None of these
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
38) The insurance required to meet coinsurance is:
A) 80% × face value
B) 80% × replacement value
C) 80% × actual loss
D) Insurance carried divided by 80%
E) None of these
Difficulty: 1 Easy
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
39) An auto insurance premium may be partially based on:
A) Attitude of driver
B) Expected life of car
C) Make of car
D) Number of years one expects to drive a car
E) None of these
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
40) Collision and comprehensive:
A) Only pay the insurer
B) Only pay the insured
C) Are compulsory insurance
D) Have no deductibles
E) None of these
Difficulty: 1 Easy
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
41) Abby Kaminsky, age 32, has decided to take out a limited payment life policy. She chose this since she expects her income to decline in future years. Abby has decided to take out a 20-year payment life policy with a coverage amount of $200,000. Using the tables in the handbook, her annual premium will be:
A) $1,158
B) $2,316
C) $2,136
D) $1,518
E) None of these
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
42) Matt Miller, age 28, takes out $50,000 of straight-life insurance. His annual premium is $418.20. At the end of 20 years, the cash value of his policy is (use the tables in the handbook):
A) $13,250
B) $26,000
C) $26,500
D) $30,000
E) None of these
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
43) Mia's office building with a $300,000 value has a rating of 2 with a building classification of A. The contents in the building are valued at $120,000. Using the tables in the handbook, the total annual premium is:
A) $1,046.40
B) $990.00
C) $1,064.40
D) $1,064.04
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
44) Lee's toy store is worth $400,000 and is insured for $300,000. Assuming an 80% coinsurance clause and a fire that caused $190,000 of damage, the liability of the insurance company is:
A) $142,500
B) $124,500
C) $187,125
D) $178,125
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
45) The property of Lance's Garage is worth $90,000. Lance has a fire insurance policy of $40,000 that contains an 80% coinsurance clause. On a fire that causes $60,000 of damage, the insurance company pays:
A) $27,777.78
B) $27,777.87
C) $33,333.33
D) $33,330.00
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
46) Howard Hane had taken out a $130,000 fire insurance policy for his new restaurant at a rate of $.82 per $100. Nine months later, Howard canceled the policy and decided to move his store to a new location. The cost of the premium to Howard is (use the table in the handbook):
A) $1,066
B) $863.46
C) $1,606
D) $836.64
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
47) Jay Miller insured his pizza shop for $200,000 for fire insurance at an annual rate per $100 of $.49. At the end of 10 months, Jay canceled the policy since his pizza shop went out of business. Using the table in the handbook, the refund to Jay is:
A) $980
B) $852.60
C) $127.40
D) $186.20
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
48) Bill Blum insured his hardware store with a fire insurance policy for $88,000 at a cost of $.84 per $100. Ten months later his insurance company canceled his policy as a result of failure to correct a fire hazard. The cost of the policy to Bill was:
A) $739.20
B) $793.20
C) $591.36
D) $616.00
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
49) Al Smith, who lives in Territory 5, carries 10/20/5 compulsory liability insurance along with optional collision that has a $300 deductible. Al, who was at fault in an accident, caused $4,000 damage to the other auto as well as $900 damage to his own car. Also, the courts awarded $15,000 and $7,000, respectively, to the two passengers in the other car for personal injuries. Al is responsible to pay a total of:
A) $5,000
B) $5,600
C) $600
D) $5,300
E) None of these
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
50) Given the following information and using the tables in the handbook, the total annual premium is:
Class 17 operator Compulsory 10/20/5 Symbol 5
Age 4
Optional 100/300 bodily Collision $200 deductible Comprehensive $200 deductible
A) $615.00
B) $622.00
C) $578.00
D) $752.00
E) None of these
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
51) Calculate the annual premium for life insurance by using the table lookup for:
| ||
Face Value: | $ | 60,000 |
Gender: |
| Female |
Type: |
| Straight-Life Policy |
Age |
| 38 |
A) $7,920
B) $787.20
C) $675.60
D) $600.00
E) None of these
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
52) Jim opened a new pizza shop. He insures his store for $90,000 for fire. What is his premium if the rate per $100 is $0.83?
A) $74.70
B) $74,700
C) $700
D) $747.00
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
53) Ben's office building with $200,000 value has a rating area of 1 with a building class of B. The contents are valued at $90,000. Using the table lookup, what is the total annual premium for both?
A) $108.00
B) $486.00
C) $820.00
D) $1,306.00
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
54) Calculate the optional bodily injury cost for the following:
Class 10; optional bodily Injury: 100/300/50
A) $94
B) $144
C) $108
D) $187
E) None of these
Difficulty: 2 Medium
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
55) Maryville University purchased building insurance for a temporary bookstore for a total annual charge of $1,600. It closed the facility after five months. What is the refund?
A) $768
B) $976
C) $624
D) $832
E) None of these
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
Match the following terms with their definitions.
A) Continual premium payments
B) Used when insured cancels
C) Blame doesn't matter in payoff
D) Periodic payment
E) Not optional
F) Combination of term and whole life
G) Result of a nonforfeiture value
H) Policyholder
I) Amount of insurance stated on the policy
J) Value of policy when terminated
K) Builds no cash value
L) Options when an insurance policy is terminated
M) One to receive face value of life insurance
N) Payment to insured from a loss
O) 80%
P) Pay for repairs to one's auto
Q) Amount insured pays
R) The insurance company
S) Fire, theft
56) Cash value
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
57) Endowment insurance
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
58) Insurer
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
59) Term insurance
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
60) No-fault
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
61) Collision
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
62) Paid-up insurance
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
63) Straight life
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
64) Face amount
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
65) Insured
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
66) Beneficiary
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
67) Indemnity
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
68) Premium
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
69) Compulsory
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
70) Coinsurance
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
71) Nonforfeiture
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
72) Short rate table
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
73) Deductible
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
74) Comprehensive
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
75) Comprehensive
Difficulty: 1 Easy
Topic: LU 20-01 Life Insurance; LU 20-02 Fire Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
Answers: 56) J 57) F 58) R 59) K 60) C 61) P 62) G 63) A 64) I 65) H 66) M 67) N 68) D 69) E 70) O 71) L 72) B 73) Q 74) S 75) S
76) Round all answers to nearest cent (as appropriate).
LIFE INSURANCE
Use tables in handbook (for females subtract three years) Calculate annual premium:
Face Value | Age & Sex of Insured | Type of Insurance | Annual Premium |
$108,000 | 21 M | 5-Year Term | A |
$40,000 | 42 F | Straight Life | B |
$90,000 | 22 M | 20-Pay Life | C |
$120,000 | 32 F | Straight Life | D |
E. What is the cash value of policy in D at the end of 10 years? | |||
Table 20-1: A. $108,000 / $1,000 = 108 × $1.85; B. $40,000 / $1,000 = 40 × $13.81; C. $90,000 / $1,000 = 90 × $8.91; D. $120,000 / $1,000 = 120 × $8.46; Table 20-2: E. 120 × $96.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
77) Complete the cost of the premium for fire insurance:
Rate of Area | Class | Building | Contents |
2 | B | $80,000 | $35,000 |
Table 20-3: $.50 × $80,000 / $100 = $400; $.6 × $35,000 / $100 = $210; $400 + $210 = $610.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
78) Calculate the amount the insurance company will pay:
Value of Property | Amount of Insurance | Policy | Actual Fire Loss | Amount Insurance Company will pay |
$70,000 | $40,000 | 80% Co-Ins | $11,200 | A |
$90,000 | $50,000 | 80% Co-Ins | $36,000 | B |
A. $70,000 × .8 = $56,000; $ 40,000 / $56,000 × $11,200 = $8,000; B. $ 50,000 / $72,000 × $36,000 = $25,000.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
79) Calculate cost and refund (use table in text if needed):
Annual Premium | Canceled After | Canceled By | Premium Cost | Refund |
$400 | 6 Months | Insured | A | B |
$800 | 9 Months | Insurer | C | D |
Table 20-4: A. $400 × .61 = $244; B. $400 - $244 = $156; C. $800 × 9 / 12 = $600; D. $800 - $600 = $200.
Difficulty: 2 Medium
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
80) Using the tables in the handbook, calculate Joe Wheel's Auto premium:
Class 17 operator
Compulsory 10/20/5
Symbol 5
Age 4
Optional 100/300 bodily
Collision $300 deductible
Comprehensive $300 deductible
Damage to someone else's property 25M
Towing
Table 20-5: $98 + $160 = $258; Table 20-6: $146; Table 20-7: $166; Table 20-8: $142; Table 20-9: $52; Table 20-10: $4; $258 + $146 + $166 + $142 + $52 + $4 = $768.
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
81) Melissa Sorez, age 42, takes out a $300,000 five-year term insurance policy. What is her annual premium? At the end of three years, what is the amount of cash value that has built up?
Table 20-1: 42 - 3 = 39; $300,000 / $1,000 = 300; 300 × $3.24 = $972; no cash value.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
82) Jim Smith, age 25, buys a straight-life policy for $105,000. What is his annual premium? If after 15 years he no longer wants to pay the premium, what nonforfeiture values are available to him?
Table 20-1: $105,000 / $1,000 = 105; 105 × $7.13 = $748.65; Table 20-2: $148 × 105 = $15,540; $371 × 105 = $38,955.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
83) Joan's Hardware Shop is worth $40,000 and is insured for $30,000. Assuming an 80% coinsurance clause, what would the insurance company pay if a fire caused $20,000 of damage to the shop?
$40,000 × .8 = $32,000; $30,000 / $32,000 × $20,000 = .9375 × $20,000 = $18,750.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
84) Jim Rivera bought a new car and carried only compulsory insurance. On a trip to Washington, he hit a car, injuring the couple inside. Jim's car had damage of $1,800, and the car struck had damage of $1,700. After a lengthy court battle, the couple hit by Jim were awarded personal injury judgments of $16,000 and $8,800, respectively. What did the insurance company pay, and what was Jim's responsibility?
Insurance Co Pays | Al Pays | |
Property Damage ($5,000) | $1,700 | $0 |
Collision (None) | $0 | $1,800 |
Bodily 10/20 | $10,000 | $6,000 |
$8,800 | $0 | |
TOTAL | $20,500 | $7,800 |
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (2) Determine the amount paid by the insurance carrier and the insured after an auto accident.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
85) Matt Clark, age 27, decided to take out a limited payment life policy. He chose this because he expects his income to decline in future years. Matt decided to take out a 20-year payment life policy with a coverage amount of $90,000. Calculate his annual premium. If he stops paying premiums after 15 years, what will his cash value be?
($90,000 / $1,000) × $10.70 = $963; Cash value: $90,000 / $1,000 = 90 × $317 = $28,530.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
86) Melissa Toby, age 36, bought a straight-life insurance policy for $80,000. Calculate her annual premium. If after 20 years she no longer pays premiums, what nonforfeiture options are available to her?
$80,000 / $1,000 = 80 × $10.20 = $816;Option 1: 80 × $265 = $21,200; Option 2: 80 × $550 = $44,000; Option 3: 12 years 300 days.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
87) The property of Vin's Garage is worth $400,000. Vin has a fire insurance policy of $160,000 that contains an 80% coinsurance clause. What will the insurance company pay on a fire that causes $180,000 of damage? If Vin met the coinsurance, how much would the insurance company pay?
$400,000 × .8 = $320,000; $160,000 / $320,000 = .5 × $180,000 = $90,000; $180,000.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.; 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
88) Ann Rill insured her dress shop for $75,000 of fire insurance at an annual rate per $100 of $.63. At the end of nine months, Ann canceled the policy since her dress shop went out of business. What was the cost of Ann's premium as well as her refund?
$75,000 / $100 = 750 × $.63 = $472.50; Table 20-2: $472.50 × .81 = $382.73; $472.50 - $382.73 = $89.77.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
89) Jim Leary insured his bookstore with a fire insurance policy of $90,000 at a cost of $.58 per $100. Eight months later his insurance company canceled the policy because of failure to correct a fire hazard. What did Jim have to pay for the eight months of coverage?
Table 20-4: $90,000 / $100 = 900; 900 × $.58 = $522; 8 / 12 × $522 = $348.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-03 (2) Determine the amount paid by the insurance carrier and the insured after an auto accident.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
90) Al Lize, who lives in territory 5, carries 10/20/5 compulsory liability insurance, along with optional collision that has a $100 deductible. Al, who was at fault in an accident, caused $2,200 damage to the other auto and $900 damage to his own car. Also, the courts awarded $18,000 and $9,000, respectively, to the two passengers in the other car for personal injuries. How much does the insurance company pay and what is Al's share of the responsibility?
Insurance Co Pays | Al Pays | |
Property Damage ($5,000) | $2,200 | $0 |
Collision ($900 — $100 Deductible) | $800 | $100 |
Bodily 10/20 | $10,000 | $8,000 |
$9,000 | $0 | |
TOTAL | $22,000 | $8,100 |
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (2) Determine the amount paid by the insurance carrier and the insured after an auto accident.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
91) Find the following:
Face Value | Age and Sex of Insured | Type of Insurance | Annual Premium |
$50,000 | 28 M | Straight Life | A |
Table 20-1: 120 × $1.85 = $222.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
92) Find the following:
Face Value | Age and Sex of Insured | Type of Insurance | Annual Premium |
$60,000 | 38 F | Straight Life | A |
Table 20-1: 38 - 3 = 35; $60,000 / $1,000 = 60; 60 × $11.26 = $675.60.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
93) Find the following:
Face Value | Age and Sex of Insured | Type of Insurance | Annual Premium |
$80,000 | 26 M | 20-Pay Life | A |
Table 20-1: $80,000 / $1,000 = 80; 80 × $10.29 = $823.20.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
94) Find the following:
Face Value | Age and Sex of Insured | Type of Insurance | Annual Premium |
$76,000 | 25 M | 5-Year Term | A |
Table 20-1: $76,000 / $1,000 = 76; 76 × $1.85 = $140.60.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
95) Find the following:
Face Value | Age and Sex of Insured | Type of Insurance | Annual Premium |
$26,000 | 37 F | Straight Life | A |
Table 20-1: 37 - 3 = 34; $26,000 / $1,000 = 26; 26 × $10.71 = $278.46.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
96) Find the following:
Face Value | Age and Sex of Insured | Type of Insurance | Annual Premium |
$100,000 | 30 M | 20-Pay Life | A |
Table 20-1: $100,000 / $1,000 = 100; 100 × $12.05 = $1,205.
Difficulty: 2 Medium
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
97) Calculate the cost of the premium:
Rating of Area | Class | Building | Contents |
1 | A | $90,000 | $30,000 |
Table 20-3: $90,000 / $100 = 900; 900 × $.28 = $252; $30,000 / $100 = 300; 300 × $.35 = $105; $105 + $252 = $357.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
98) Calculate the cost of the premium:
Rating of Area | Class | Building | Contents |
2 | A | $80,000 | $50,000 |
Table 20-3: $80,000 / $1,000 = 800; 800 × $.50 = $400; $50,000 / $100 = 500; 500 × $.60 = $300; $400 + $300 = $700.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
99) Find the following:
Value of Property | Amount of Insurance | Kind of Policy | Actual Fire Loss | Amount Insurance Company will Pay |
$400,000 | $300,000 | 80% Coins. | $120,000 | A |
$400,000 × .8 = $320,000; $300,000 / $320,000 = .9375; .9375 × $120,000 = $112,500.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
100) Find the following:
Value of Property | Amount of Insurance | Kind of Policy | Actual Fire Loss | Amount Insurance Company will Pay |
$300,000 | $200,000 | 80% Coins. | $160,000 | A |
$300,000 × .8 = $240,000; $200,000 / $240,000 × $160,000 = $133,333.33.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
101) Find the following:
Annual Premium | Canceled After | Canceled By | Premium Cost | Refund |
$300 | 7 Months | Insured | A | B |
A. Table 20-4: $300 × .67 = $201; B. $300 - $201 = $99.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
102) Find the following:
Annual Premium | Canceled After | Canceled By | Premium Cost | Refund |
$900 | 8 months | Insurer | A | B |
A. $900 × 8 / 12 = $600; B. $900 - $600 = $300.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
103) Find the following:
Annual Premium | Canceled After | Canceled By | Premium Cost | Refund |
$600 | 7 months | Insured | A | B |
A. Table 20-4: $600 × .67 = $402; B. $600 - $402 = $198.
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
104) Find the following:
Annual Premium | Canceled After | Canceled By | Premium Cost | Refund |
$800 | 7 months | Insurer | A | B |
A. $800 × 7 / 12 = $466.67; B. $800 - $466.67 = $333.33
Difficulty: 2 Medium
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
105) Using the tables in the handbook, calculate Joe Brake's annual auto premium.
Class 17 operator
Compulsory 10/20/5
Symbol 6
Age 3
Optional 50/100 bodily
Collision $300 deductible
Comprehensive $300 deductible
Damage to someone else's property 25M
Towing
Table 20-5: $98 + $160 = $258; Table 20-6: $104; Table 20-7: $166; Table 20-8: $166; Table 20-9: $73; Table 20-10: $4; $258 + $104 + $166 + $166 + $73 + $4 = $771.
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
106) If Joe Wheel decides to decrease his deductible to $100 for collision, what is the additional cost?
Use Table 20.8 to find Class 17 with the heading $300 to $100; at that intersection you will find $43.
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
107) Alice Stone is thinking about taking out $90,000 of five-year term insurance. Alice is 35 years old. What will her annual premium be?
Table 20-1: $90,000 / $1,000 = 90; 90 × $1.88 = $169.20.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
108) Bill Small, age 28, would like to take out a 20-year endowment policy that has a coverage amount of $30,000. Can you calculate for Bill (A) his annual premium and (B) the cash value at the end of 10 years?
Table 20-1: A. $30,000 / $1,000 = 30; 30 × $19.12 = $573.60; Table 20-2; B. 30 × $319 = $9,570.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
109) Joe Rossen opened a pizza shop. He insures his shop for $90,000 for fire. What is his insurance premium if the rate per $100 is $.83?
$90,000 / $100 = 900 × $.83 = $747.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
110) John Davis's store is worth $400,000 and is insured for $240,000. Assuming an 80% coinsurance clause and a fire that caused $100,000 of damage, what is the liability of the insurance company?
$400,000 × .8 = $320,000; $240,000 / $320,000 × $100,000 = $75,000.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (3) Explain and calculate insurance loss when coinsurance is not met.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
111) Joan Raft had taken out an $80,000 fire insurance policy for her new shop at a rate of $.81 per $100. Seven months later, Joan canceled the policy and decided to move the shop to a new location. What refund did she receive?
$80,000 / $100 = 800; 800 × $.81 = $648.00; Table 20-4: $648 × .67 =$ 434.16; $648 - $434.16 = $213.84.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
112) Abe Blerf insured his shop with fire insurance for $70,000 at a cost of $.83 per $100. Eight months later, his insurance company canceled his policy because of failure to correct fire hazards. What did Abe pay for the eight months of coverage?
$70,000 / $100 = 700 × $.83 =$ 581; 8 / 12 × $581 = $387.33.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
113) John Jay carries a $500 deductible for collision. An accident resulted in $850 worth of damage to his car. What portion will the insurance company pay?
$850 - $500 = $350.
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (2) Determine the amount paid by the insurance carrier and the insured after an auto accident.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
114) Calculate the annual total auto premium from the following. There is compulsory insurance.
Territory 5
Class 10
Symbol 7
Age 4
Bodily Injury 100/300
Collision $200 deductible
Comprehensive $200 deductible
Table 20-5: $55 + $129 = $184; Table 20-6: $94; Table 20-8: $176 + $13 = $189; Table 20-9: $99 + $4 = $103; $184 + $94 + $189 + $103 = $570.
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
115) Bill's office building with a $200,000 value has a rating of 1 with a building classification of B. The contents in the building are valued at $90,000. What is the total annual premium?
Table 20-3: $200,000 / $100 = 2,000; 2,000 × $.41 = $820; $90,000 / $100 = 9,000; 9,000 × $.54 = $486; $820 + $486 = $1,306.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (2) Calculate refunds when the insured and the insurance company cancel fire insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
116) Abby Small, age 40, wants to take out a $300,000 term insurance policy. What is her annual premium? At the end of five years, what is the cash value?
Table 20-1: $300,000 / $1,000 = 300; 300 × $2.67 = $801; no cash value.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.; 20-01 (2) Explain and calculate cash value and other nonforfeiture options.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
117) Jenny Siebert purchased a new Ford Explorer and insured it for compulsory 10/20/5. She lives in Territory 5. She is classified as 10. Her car is age 3 and symbol 4. Calculate Jenny's compulsory insurance.
Table 20-5: Bodily = $55; Property = $129; $129 + $55 = $184.
Difficulty: 3 Hard
Topic: LU 20-03 Auto Insurance
Learning Objective: 20-03 (1) Explain and calculate the cost of auto insurance.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
118) Tom Brotherton decided at age 44 to purchase a five-year term policy for $500,000. What is his monthly premium?
Table 20-1: $500,000 / $1,000 = 500; 500 × $4.50 = $2,250; $2,250 / 12 = $187.50.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
119) Calculate the annual insurance premium for the following:
Rating area: 3; class B; building $95,000; contents for $50,000.
Table 20-3: $95,000 / $100 = 950; 950 × $.61 = $579.50; $50,000 / $100 = 500; 500 × $.65 = $325; $579.50 + $325 = $904.50.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
120) Janet opened a second bridal shop and paid $1,200 for annually fire insurance. As a result of the Great Recession, she was forced to close her shop after four months. What did the insurance cost her?
Table 20-4: $1,200 × .56 = $672.
Difficulty: 3 Hard
Topic: LU 20-02 Fire Insurance
Learning Objective: 20-02 (1) Explain and calculate premiums for fire insurance of buildings and their contents.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
121) Stephanie received a $100,000 term life insurance policy as part of her employment compensation. What did her company pay for the five-year term policy if Stephanie was 44 at the time of employment?
Table 20-1: 44 -3 = 41; $100,000 / $1,000 = 100; 100 × $3.79 = $379.
Difficulty: 3 Hard
Topic: LU 20-01 Life Insurance
Learning Objective: 20-01 (1) Explain the types of life insurance; calculate life insurance premiums.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
Document Information
Connected Book
Business Math Procedures 13e Test Bank with Answers
By Jeffrey Slater