1.Of the following, which type of life insurance policy would probably accumulate the least amount of funds for investment in capital market securities?
b.whole life insurance
d.universal life insurance
2.Which statement is not true about life insurance companies?
a.they have relatively predictable inflows and outflows.
b.their liabilities are long-term in nature.
c.they invest heavily in short-term highly marketable securities.
d.they sell contracts that offer financial protection against premature death and against living too long.
3.Which statement is not true about casualty insurance companies?
a.they are subject to federal income tax.
b.they invest heavily in municipal bonds.
c.they have more predictable cash flows related to claims than life insurance companies.
d.they invest in corporate stock.
4.Which one of the following types of casualty insurance policy would a bank purchase if it wants to protect itself against economic loss from bank tellers who might embezzle cash?
5.Which one of the following statements best describes the insurance industry?
a.major insurance company liabilities are called reserves.
b.most life insurance companies are stock companies.
c.mutual insurance accounts for about half of all the life insurance in force.
d.all of the above are true.
6.Traditionally, pension funds were:
7.Pension funds whose contributions are NOT large enough to actually cover the benefits to be paid out when all employees retires are termed:
8.A pension plan feature that provides employees with the right to future retirement income, even if the employee terminates employment, is called:
9.All of the following are methods used by insurance companies to reduce objective risk except:
a.safety education programs.
b.selective underwriting of insureds.
c.investment in investment grade securities only.
d.use of deductibles.
10.Keogh plans and IRAs are
a.government sponsored retirement programs.
b.noninsured retirement plans.
c.individual retirement programs.