Insurance Exam Flashcards

A property insurance concept that prevents an insured from collecting more than the actual financial loss sustained is called the principle of:

Answer: Indemnity

The principle of indemnity states that insurance should restore the insured to the same financial position as before the loss, not better.

Which Medicare supplement plan is standardized and covers the Medicare Part A deductible?

Answer: Plan B

Medigap Plan B covers the Medicare Part A hospital deductible in addition to the basic benefits included in all Medigap plans.

An insurer that is incorporated in the state where it is doing business is called a:

Answer: Domestic insurer

A domestic insurer is one that is incorporated and chartered in the same state where it sells insurance.

The Workers' Compensation law requires employers to provide benefits for employees injured:

Answer: In the course and scope of employment

Workers' compensation is a no-fault system covering injuries arising out of and in the course of employment, regardless of employer negligence.

A universal life insurance policy's death benefit option that keeps the face amount level while cash value changes is called:

Answer: Option A (Level death benefit)

Under universal life Option A, the total death benefit remains level, so as cash value grows the net amount at risk decreases.

Which liability coverage pays for bodily injury or property damage that the insured becomes legally obligated to pay?

Answer: Personal liability coverage

Personal liability coverage protects the insured against claims arising from their legal responsibility for injury or damage to others.

The period between when an insurance application is submitted and when the policy is issued during which temporary coverage may apply is called the:

Answer: Binding period

A binding period (or binder) provides temporary coverage from the time the application is accepted until the formal policy is issued.