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Insurance Awareness Questions – Set 15

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Dear Aspirants,
Welcome to Insurance Awareness Questions in AffairsCloud.com. Here we are covering some important Insurance Awareness Questions & Answers with Explanations. Do study this questions thoroughly as it may prove to be helpful in upcoming exams and also in interviews.

    1. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires is termed as _____
      A. Affinity sales
      B. Demutualization
      C. Annuitization
      D. Earned Premium
      D. Earned Premium
      Explanation:
      The amount of a premium which is considered by the insurance company to have already been earned by them.

    2. Funds that a lender collects to pay monthly premiums in mortgage and home owners insurance, and sometimes to pay property taxes is called ____
      A. Affinity sales
      B. Demutualization
      C. Escrow Account
      D. Earned Premium
      C. Escrow Account
      Explanation:
      An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties.

    3. A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations is called _____
      A. Affinity sales
      B. Exclusion
      C. Escrow Account
      D. Earned Premium
      B. Exclusion
      Explanation:
      Exclusions are the cases for which the insurance company does not provide coverage. These are the conditions excluded from the insured event to avoid losses to the company.

    4. A written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions is termed as _______
      A. Endorsement
      B. Exclusion
      C. Escrow Account
      D. Earned Premium
      A. Endorsement
      Explanation:
      An endorsement is a legal term that refers to the signing of a document which allows for the legal transfer of a negotiable from one party to another.

    5. Legal responsibility of a fiduciary to safeguard assets of beneficiaries is termed as________
      A. Endorsement
      B. Fiduciary Liability
      C. Escrow Account
      D. Earned Premium
      B. Fiduciary Liability
      Explanation:
      A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other.

    6. Contract under which the ultimate liability of the reinsurer is capped and on which anticipated investment income is expressly acknowledged as an underwriting component is called ________
      A. Finite Risk Reinsurance
      B. Fire Insurance
      C. Escrow Account
      D. Earned Premium
      A. Finite Risk Reinsurance
      Explanation:
      Finite risk reinsurance is a form of reinsurance that specifically incorporates the time value of money.

    7. _______ is a Coverage protecting property against losses caused by a fire or lightning that is usually included in home owners or commercial multiple peril policies.
      A. Finite Risk Reinsurance
      B. Fire Insurance
      C. Escrow Account
      D. Earned Premium
      B. Fire Insurance
      Explanation:
      A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period.

    8. _______ is a coverage for the policyholder’s own property or person.
      A. First Party Coverage
      B. Second Party Coverage
      C. Third Party Coverage
      D. None of the Above
      A. First Party Coverage
      Explanation:
      First Party insurance coverage insures against loss or damage sustained by the insured (person for whom the policy is written to protect and/or person or business entity who purchases the insurance).

    9. _______ is a coverage for flood damage is available from the federal government under the National Flood Insurance Program but is sold by licensed insurance agents.
      A. Flood Insurance
      B. Commercial Insurance
      C. Industrial Insurance
      D. Liability Insurance
      A. Flood Insurance
      Explanation:
      Flood insurance denotes the specific insurance coverage against property loss from flooding.

    10. ________ is an insurance purchased by a bank or creditor on an uninsured debtor’s behalf so if the property is damaged, funding is available to repair it.
      A. Flood Insurance
      B. Forced Place Insurance
      C. Industrial Insurance
      D. Liability Insurance
      B. Forced Place Insurance
      Explanation:
      Forced place insurance is intended to ensure that the property remains insured, protecting both the home owner and the lien holder.

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