AFE Online Practice Questions and Answers

Supplementary contracts may be issued by an insurer upon the termination of a life insurance contract that has been terminated by death, maturity, or surrender. The policyholder, if living or the beneficiary elects the option under which the proceeds are paid. The payment options usually available are:

A. To receive a guaranteed fixed number of payments

B. To receive payments of a certain amount until the proceeds are exhausted.

C. To leave the proceeds with the insurer to earn interest with payment to be made at a later date.

D. Any one out of these

Asset/Liability Management recognizes that the financial impact of an asset or liability is mainly realized through its:

A. Revenues

B. Cash flows

C. Expenses

D. Investments

The financial statements of which accounts maintained by insurance company that must be presented separately from the insurance company's general account business?

A. Business

B. Temporal

C. Principal

D. Segregated

Excess liability:

A. covers the insured against the loss in access of an actual amount, but only for profits as covered and defined in a predetermined planning.

B. covers the insured against the loss in access of an actual amount, but only for profits as covered and defined in an underlying policy.

C. covers all uninsured against the gain in access of a stated amount, but only for losses as covered and defined in an underlying policy.

D. covers the insured against the loss in access of a stated amount, but only for losses as covered and defined in an underlying policy.

Insurance entities establish claims of the member companies.

A. Company competency

B. Claim opportunities

C. Corrective strategies

D. Adjustment bureaus

______ is used when the rates for large or usual risks are established almost entirely by the skill and experience of the rate maker.

A. Expertise rating

B. Premium rating

C. Class rating

D. Individual rating

_______ is contractual right of recovery that entitles the insurer to any proceeds from the disposal of damaged property for which the claim has been made.

A. Claim adjustment

B. Claim recovery

C. Subrogation

D. Salvage

Adjusting and Others (AO) reserves are often provided for by using the calendar year paid-to-paid method rather than the accident year paid-to-paid method used for Inflation in Defense and Cost Containment (DCC) reserves.

A. True

B. False

The difference between the purchase price and the repurchase price, or sale price, plus accrued interest on the security represents:

A. Accounting agreement

B. Investment income

C. Dollar price

D. Saving price

What is made on an instrument-by-instrument basis, generally when an instrument is initially recognized in the financial statements?

A. Election

B. Disclosure

C. Eligibility

D. Discount