Chapter 38
Insurance
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1. Insurance is a contract by which one party for a stipulated consideration promises to pay another party a sum of money upon the occurrence of a stated event in which the other party has an interest.
a. True
b. False

2. Generally, an insurance broker is an employee of an insurance company.
a. True
b. False

3. An insurable interest attaches when property is damaged.
a. True
b. False

4. A insured person may name anyone as a beneficiary of a life insurance policy.
a. True
b. False

5. Insurance contracts are regulated by state statute.
a. True
b. False

6. A contract of insurance is to be interpreted as it would be understood by a person with technical knowledge of the law or of insurance.
a. True
b. False

7. An ambiguity in an insurance policy is interpreted in favor of the insurer.
a. True
b. False

8. Coverages that are expressly excluded or excepted from the policy are called exceptions.
a. True
b. False

9. Under no-fault insurance, an insurer is not obligated to pay an injured person unless it is the insured's fault.
a. True
b. False

10. A homeowner's policy commonly excludes coverage for both intentional and negligent injuries.
a. True
b. False

11. A person who would suffer a direct pecuniary loss if a particular piece of property were destroyed has a(n) ________________.
a. contractual risk
b. hazard
c. problem
d. insurable interest

12. If a man names his wife as beneficiary of his life insurance and the two are thereafter divorced, the insurance policy:
a. is canceled automatically.
b. is not affected.
c. is divided into two policies on the life of each for one-half the amount of the original policy.
d. becomes the property of the former wife.

13. For property insurance, an insurable interest must exist:
a. at the time that the policy is purchased.
b. at the time of the loss.
c. 30 days prior to the time the loss is sustained.
d. at least 30 days before and after the loss is suffered.

14. Armenia purchased life insurance on her life. Regarding the beneficiary:
a. Armenia must name a person with a pecuniary interest in her life.
b. Armenia must name a close relative.
c. Armenia must name a close relative or business associate.
d. Armenia may name whomever she wishes.

15. Generally, the "grace period" for payment of premiums on life insurance policies is _______.
a. 2 weeks
b. 30 to 31 days
c. 2 months
d. 15 days



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