CPCU 500 NEWEST EXAM ACTUAL EXAM AND STUDY GUIDE WITH 400 UPDATED QUESTION AND ANSWERS (VERIFIED ANSWERS) [ALREADY GRADED A+]
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Course
CPCU 500
Institution
CPCU 500
CPCU 500 NEWEST EXAM ACTUAL EXAM
AND STUDY GUIDE WITH 400 UPDATED QUESTION
AND ANSWERS (VERIFIED ANSWERS) [ALREADY
GRADED A+]
Which one of the following is a liability policy that provides excess coverage
above underlying policies and may also provide coverage not available in
the unde...
Which one of the following is a liability policy that provides excess coverage
above underlying policies and may also provide coverage not available in
the underlying policies, subject to a self-insured retention?
Select one:
A. Primary policy
B. Excess policy
C. Umbrella policy
D. Buffer policy - ANSWER-C. Umbrella policy
Insurance is a
Select one:
A. Layered coverage.
,2|Page
B. Funded risk transfer measure.
C. Large loss exposure.
D. Liability. - ANSWER-B. Funded risk transfer measure.
Many states require a self-insurer to
Select one:
A. File small claims with an insurer.
B. Provide a cash flow benefit.
C. Supervise defense attorneys.
D. Purchase excess insurance. - ANSWER-D. Purchase excess insurance.
Which one of the following statements is correct with respect to transfer's
ability to meet risk financing goals?
Select one:
A. The primary benefit of transfer is certainty regarding the ability to pay
losses.
,3|Page
B. Transfer is less effective than retention in managing cash flow variability.
C. Transfer increases the level of liquidity that an organization requires.
D. The primary benefit of transfer is that it allows an organization to
manage its cost of risk. - ANSWER-A. The primary benefit of transfer is
certainty regarding the ability to pay losses.
Which one of the following statements is correct with respect to retention's
ability to meet risk financing goals?
Select one:
A. Retention exposes an organization to less variability in cash flows than
transfer.
B. Retention enables an organization to manage its cost of risk.
C. Retention is the most effective way to meet the risk financing goal of
paying losses.
D. Retention generally reduces the level of liquidity needed. - ANSWER-B.
Retention enables an organization to manage its cost of risk.
A self-insured organization needs a(n)
Select one:
A. Recordkeeping system to track its self-insured claims.
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B. Workers compensation or auto liability loss exposure.
C. Third-party administrator (TPA).
D. Informal retention plan. - ANSWER-A. Recordkeeping system to track its
self-insured claims.
Which one of the following statements is correct regarding how a large
deductible plan compares with guaranteed cost in meeting the various risk
financing goals?
Select one:
A. The level of liquidity that needs to be maintained is lower for a large
deductible plan than guaranteed cost insurance.
B. Cash flow uncertainty is better managed by a large deductible plan than
by guaranteed cost insurance.
C. A large deductible plan minimizes the cost of risk better than a
guaranteed cost insurance.
D. Complying with legal and regulatory requirements is more difficult with a
large deductible plan than with guaranteed cost insurance. - ANSWER-C. A
large deductible plan minimizes the cost of risk better than a guaranteed
cost insurance.
Under a large deductible plan, the insured usually must provide the insurer
with a letter of credit to
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