Question

insurance

9. Connie has a major medical policy with a $400 deductible and a 80-20 coinsurance (percentage participation) clause. If she has eligible medical expenses of $1,000, how much will be paid by her insurer? ) A) $400 B) $480 C) $640 D) $800 10. A property and casualty insurer's loss reserve includes estimates for all of the following EXCEPT A) claims anticipated but not yet incurred. B) claims reported and adjusted but not yet paid. C) claims reported and filed but not yet adjusted. D) claims incurred but not yet reported to the company 11. All of the following are functions of the marketing department of an insurance company EXCEPT A) to advertise the insurer's products. C) to identify production goals. 12. All of the following are reasons for a primary insurer to use reinsurance EXCEPT A) to increase the unearned premium reserve. C) to protect against catastrophic losses. 13. Sam's stereo was destroyed by a fire. The stereo cost $1200 when it was purchased, but a similar new stereo now costs $1800. Assuming the stereo was 50 percent depreciated, what is the B) to develop new products D) to make final underwriting decisions. B) to increase underwriting capacity D) to stabilize profits. > ( actual cash value of Sam's loss? B) $900 A) $600 D) $1800 C) $1200 14. Factors that may result in more restrictive underwriting decisions include which of the ( ) following? I.Inadequate rates II. The unavailability of reinsurance at favorable ternms A) I only B) II only 2/4

Answer 1

9) Insurer will pay lower of premium received amounting to $400 or the share of claim amounting to $1000 x 80% $800. Therefore Insurer will pay $400 resultingly. Therefore the correct option is (A) 10) The claim that have incurred but not reported to the company is not under consideration option (D) for the company financials. Therefore the thre coorect answer is 11) Marketing department works for promotion, identifying the production goals and identifying the product that should be developed but It does not have a role in the matter of underwriting decisions, Therefore the correct option is (D) 12) the primary insurer does not use the reinsurance concept for increasing the unearned premium reserves. Because unearned premium reserve is an account reflecting the portion of accounted premium that has nopt yet accrued to the company. Therefore the correct option is (A). 13) Depreciation is a non cash item, therefore the net cash value of Sam's loss will be $1800 $1200 $600, Therefore the correct option is (A) 14) factor such as unavailability of reinsurance at favorable terms do result in more restrictive underwriting decisions, Therefore the correct option is (B)