CU Insurance Products & Coverage Types 2 — Questions and Answers
Question 1: Which type of life insurance policy builds cash value AND provides a fixed death benefit for the insured's entire lifetime?
- Term life
- Whole life (Correct answer)
- Decreasing term
- Group term
Correct answer: Whole life
Whole life insurance provides permanent coverage with a guaranteed death benefit and accumulates cash value over time.
Question 2: A homeowner's policy written on an 'open peril' (all-risk) basis covers losses from:
- Only the perils specifically listed in the policy
- All causes of loss except those explicitly excluded (Correct answer)
- Fire and lightning only
- Named perils agreed upon at renewal
Correct answer: All causes of loss except those explicitly excluded
Open peril (all-risk) policies cover any cause of loss not specifically excluded, giving broader protection than named-peril forms.
Question 3: Under a Business Owners Policy (BOP), which coverage is typically EXCLUDED that must be purchased separately?
- Building property damage
- Business personal property
- Commercial auto liability (Correct answer)
- Business income interruption
Correct answer: Commercial auto liability
A BOP bundles property and general liability but does NOT include commercial auto; vehicles require a separate commercial auto policy.
Question 4: The 'incontestability clause' in a life insurance policy generally prevents the insurer from voiding the policy after:
- 6 months
- 1 year
- 2 years (Correct answer)
- 5 years
Correct answer: 2 years
After two years, insurers cannot contest the validity of most life policies based on misrepresentation, except for fraud.
Question 5: Which liability coverage pays for bodily injury or property damage that occurred during the policy period, regardless of when the claim is filed?
- Claims-made policy
- Occurrence policy (Correct answer)
- Retro-active policy
- Sunset policy
Correct answer: Occurrence policy
Occurrence policies trigger on when the injury or damage happened, not when the claim is submitted.
Question 6: Medical Payments coverage on a homeowner's policy differs from liability coverage because it pays:
- Only when the insured is legally negligent
- Regardless of fault for guests injured on the premises (Correct answer)
- Only for family members living in the home
- Only after a lawsuit is filed
Correct answer: Regardless of fault for guests injured on the premises
Medical Payments (Coverage F) is a no-fault coverage paying guest medical bills without requiring proof of the insured's negligence.
Question 7: An umbrella liability policy is designed primarily to:
- Replace underlying auto and homeowner policies
- Provide excess limits above underlying policies and fill certain coverage gaps (Correct answer)
- Cover business-related losses only
- Fund retirement savings with a liability component
Correct answer: Provide excess limits above underlying policies and fill certain coverage gaps
Umbrella policies sit above underlying coverage limits and often extend to some exposures not covered by the underlying policies.
CU Insurance Products & Coverage Types 2
Which type of life insurance policy builds cash value AND provides a fixed death benefit for the insured's entire lifetime?