CAT2 = Assignment 3 (Principles of Risk Mgt & Insurance)
This is Assignment 3. Please do it and revert back to the lecturer for questions or comments.
Reg. No. (write properly)
1. In 'Risk Management', the variation between actual and expected results is known as:
(a) Objective risk
(b) Objective probability
(c) Subjective probability
(d) Subjective risk
2. All of the following risks are privately insurable EXCEPT:
(a) the risk of premature death
(b) the risk of physical damage to your car
(c) the risk of unemployment
(d) the risk of poor health
3. The first step in the risk management process is:
(a) measure and analyze exposures
(b) exposure identification
(c) implementation of the risk management program
(d) selection of the appropriate risk treatment technique
4. A written provision that adds to, deletes from, or in some other way alters an insurance contract is called a(n):
Endorsement or rider
5. All of the following are elements of a negligent act EXCEPT:
Existence of a legal duty
Failure to perform that duty
Damages or injury to the claimant
Inability of the tortfeasor to pay the damages
6. All of the following are common exclusions under workers compensation and employer liability insurance EXCEPT:
Injuries that are not employment-related
7. Theft is a broad term that includes burglary and robbery.
8. Premature death is defined as death before reaching life expectancy.
9. All of the following benefits are available through workers compensation EXCEPT:
10. As an alternative to reinsurance, some insurers transfer insurable risk to the capital markets through the creation of a financial instrument, such as a catastrophe bond. Such transfers are called:
Immunization of risk.
Avoidance of risk.
Securitization of risk.
Indexation of risk.
11. Pascal was just diagnosed with an inoperable brain tumor. According to his doctor, Tom has less than three months to live. A life insurance premium notice just arrived. Tom purchased this whole life policy over 40 years ago. Pascal does not want to pay the premium. Which nonforfeiture option should Tom exercise?
(a) reduced paid-up insurance
(b) extended term insurance
(b) cash value
(c) life income
12. Prior to passage of the workers compensation laws, employers could avoid liability to employees injured on the job by invoking common law defenses. Under one such defense, the employer asserted that because the employee helped to bring about the injury, the employer was not responsible. This common law defense is:
(a) assumption of the risk
(b) liability without fault
(c) the fellow servant doctrine
(d) contributory negligence
13. Self-insurance is an example of which of the following risk management techniques?
(a) loss control
(b) noninsurance transfer
14. An important consideration in determining the amount of life insurance to purchase is the need for income during the one- or two-year period after the death of the breadwinner. This period is called the:
(a) blackout period
(b) readjustment period
(c) accumulation period
(d) dependency period
15. Which $50,000 life insurance policy, if purchased at age 32, would have the highest cash value when the insured was 50 years old?
(a) whole life paid-up at age 65
(b) 10-year level term insurance
(c) continuous premium whole life insurance
(d) 10-payment whole life insurance
16. Although the normal retirement age in most plans is 65, many workers retire before the normal retirement age.
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