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Insurance Awareness Questions – Set 8

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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. Coverage for losses incurred as a result of the failure of an insured object on the insured’s premises is referred as ______
    A. Conditional Contract
    B. Conditional Receipt
    C. Conditional Renewable
    D. Consequential Damage Endorsement
    D. Consequential Damage Endorsement
    Explanation:
    Consequential damages are an indirect result of a direct loss.Coverage for losses incurred as a result of the failure of an insured object on the insured’s premises.

  2. A person named in a life insurance contract to receive the benefits of the policy if other named beneficiaries are not living is referred as _______
    A. Contingent Beneficiary
    B. Contingent Liability
    C. Contractual Liability
    D. Convertible
    A. Contingent Beneficiary
    Explanation:
    A contingent beneficiary is specified by an insurance contract holder who will receive the benefits if the primary beneficiary has died at the time the benefit is to be paid.

  3. _________ is the liability of individuals, corporations, or partnerships for accidents caused by people other than employees for whose acts or omissions the corporations or partnerships are responsible.
    A. Contingent Beneficiary
    B. Contingent Liability
    C. Contractual Liability
    D. Convertible
    B. Contingent Liability
    Explanation:
    A contingent liability is a potential obligation that may be incurred depending on the outcome of a future event.

  4. ___________ is the liability arising from contractual agreements in which it is stated that some losses, if they occur, are to be borne by specific parties.
    A. Contingent Beneficiary
    B. Contingent Liability
    C. Contractual Liability
    D. Convertible
    C. Contractual Liability
    Explanation:
    The liability assumed when entering into a contract in which either party to the contract fails to perform in accordance with the terms, otherwise known as a breach of contract.

  5. A term policy that can be converted to permanent coverage rather than expiring on a specific date is called _________
    A. Contingent Beneficiary
    B. Contingent Liability
    C. Contractual Liability
    D. Convertible
    D. Convertible
    Explanation:
    Convertible Insurance is a type of life insurance that allows the policyholder to change a term policy into a whole or universal policy without going through the health qualification process again.

  6. Commercial coverage against losses resulting from the failure of business debtors to pay their obligation to the insured, usually due to insolvency is termed as ______
    A. Credit Insurance
    B. Contingent Liability
    C. Contractual Liability
    D. Convertible
    A. Credit Insurance
    Explanation:
    Credit insurance is a type of life insurance policy purchased by a borrower that pays off one or more existing debts in the event of a death, disability, or in rare cases, unemployment.

  7. The ratio of losses incurred to premiums earned; anticipated when rates are first formulated is termed as_______
    A. Expected Loss Ratio
    B. Expense Ratio
    C. Extended Coverage
    D. Extra Expense Insurance
    A. Expected Loss Ratio
    Explanation:
    It is a technique used to determine the projected amount of claims relative to earned premiums.

  8. Percentage of each premium rupee that goes to insurers’ expenses including overhead, marketing, and commissions is called_________
    A. Expected Loss Ratio
    B. Expense Ratio
    C. Extended Coverage
    D. Extra Expense Insurance
    B. Expense Ratio
    Explanation:
    The expense ratio is a measure of profitability calculated by dividing the expenses associated with acquiring, underwriting and servicing premiums by the net premiums earned by the insurance company.

  9. An endorsement added to an insurance policy, or clause within a policy, that provides additional coverage for risks other than those in a basic policy is termed as ______
    A. Expected Loss Ratio
    B. Expense Ratio
    C. Extended Coverage
    D. Extra Expense Insurance
    C. Extended Coverage
    Explanation:
    Extended coverage is a term used in the property insurance business. All insurance policies have exclusions specific causes of loss also called “perils” that are not covered by the insurance company.

  10. The consequential property insurance that covers the extra expense incurred by the interruption of a business is called _________
    A. Expected Loss Ratio
    B. Expense Ratio
    C. Extended Coverage
    D. Extra Expense Insurance
    D. Extra Expense Insurance
    Explanation:
    Extra expense insurance is designed to cover a business from expenses that it may incur while normal business operations are disrupted.

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