Carl applies for fire insurance for his house

1) Carl applies for fire insurance for his house. Before the application is processed, Carl’s house burns down. Carlwill have coverage if the insurance companyA. issued a binder.B. makes coverage retroactive.C. chooses to accept the application.D. doesn’t find out about the fire until after the policy issues.2) Tom contacts an attorney about filing bankruptcy. The attorney says that Tom will have to pass a means test. This suggests the attorney is planning to file Tom’s bankruptcy under ChapterA. 11.B. 13.C. 12.D. 7.3) Carl is in a car accident caused by Frank. Carl was able to collect damages and medical expenses from his owninsurance company even though fault had yet to be determined. Carl probably lives in a state that requires __________ insurance.A. no-faultB. uninsured motoristC. collisionD. liability4) Terry parks his car outside the restaurant and goes inside to eat. When he returns, his car has been damaged byvandalism. Terry’s insurance company will pay for the repairs if Terry has __________ insurance.A. no-faultB. liabilityC. comprehensiveD. collision5) Tom gave a mortgage to Big Bank. Big Bank failed to record the mortgage. Then Tom gave a mortgage toSecond Bank. Second Bank recorded the mortgage and didn’t know about the mortgage to Big Bank. After Second Bank recorded, Big Bank recorded its mortgage. After both mortgages are recorded, Tom defaults on both debts. Which of the following statements is true?A. Tom doesn’t owe the debt to Big Bank because Big Bank failed to record the mortgage promptly.B. If these are the only two mortgages on the property, they’ll share the proceeds pro-rata based on the amount due each.C. Big Bank has a first mortgage.D. Second Bank has a first mortgage.6) Josey borrowed money from First Bank to purchase a big-screen television. First Bank filed a financingstatement. Two days before First Bank filed a financing statement, Josey went to Local Finance Company and borrowed money there, listing the television as collateral. Local Finance Company filed a financing statement on the same day. Josey defaulted on both loans. According to the law, what should happen to the television?A. Local Finance Company will take the television because it has a purchase-money security interest.B. Local Finance Company will take the television because it was the first to perfect.C. First Bank will take the television because its interest was the first to attach.D. First Bank will take the television because it has a purchase-money security interest.7) Bob is concerned that Social Security retirement income won’t be enough to meet his needs. He is looking for afinancial product that would provide him with steady retirement income later in life. You would recommendA. universal life insurance.B. straight life insurance.C. term life insurance.D. annuity.8) Tom purchases a life insurance policy and then joins the military. Tom is deployed in a combat zone and killedby enemy soldiers. Tom’s wife applies for the insurance proceeds. Which of the following is most likely?A. The insurance company will pay only after the military certifies that Tom would have been honorably discharged had he completed his term of service.B. The insurance company won’t pay, as death due to war activities is usually exempted from the risk insured against.C. The insurance company will pay double because the death was during war.D. The insurance company won’t pay, as military benefits supersede any civilXXXXX XXXXXfe insurance.9) Victor applies for life insurance. On the application, when asked if he had ever been diagnosed with cancer, hefalsely said no. Later Victor died, and the insurance company found out about the previous diagnosis of cancer and refused to pay. What were the most likely grounds?A. ConcealmentB. MisrepresentationC. Failure to pay premiumsD. Estoppel10) Zeke has purchased insurance with a double-indemnity benefit. This meansA. if Zeke dies from an accident, the amount of the insurance proceeds will be double the amount of the policy.B. if Zeke lives beyond an age specified in the policy, the amount of the insurance proceeds is doubled.C. the policy is backed by a second insurance company who has reinsured the risk.D. when Zeke dies, there will be two beneficiaries to the policy rather than one.11) Candy purchase a life insurance policy. Six months later, Candy falls into a severe depression and kills herself.Which of the following statements is true?A. Life insurance will pay unless the suicide was an assisted suicide and the person assisting was the beneficiary of the policy.B. Life insurance will pay proceeds if there’s evidence that Candy suffered from a diagnosed psychological condition that accounts for why she committed suicide.C. The life insurance will pay double under the double indemnity provision.D. Life insurance will pay nothing, as there was death by suicide less than two years after purchasing the policy.12) What type of life insurance would most likely be used to cover the outstanding balance of a home mortgage?A. EndowmentB. Straight lifeC. Decreasing term insuranceD. Universal life13) Tom has fire insurance to protect his house. There’s a fire. Fire damages the property. When firefighters spraywater on the fire to put it out, the water causes damage. In addition, to keep the fire from spreading to neighboring houses, the firemen destroy part of the house. Which of the following damage typically would be covered under a fire insurance policy?A. Damage from the fire, the firefighters’ hose water, and the property destruction by the firefighterB. Damage from the fire and from the firefighters’ hose waterC. Damage from the fireD. Damage from the fire and from property destruction by the firefighters14) Tom’s life insurance has no cash surrender value. It must beA. endowment.B. straight life.C. limited-payment life insurance.D. term life insurance.15) Sammy took out a home insurance policy on the home of his neighbor, Ed. Three months later, Ed’s homemysteriously burned down. Sammy attempted to collect on the policy he purchased earlier. Which of the following statements regarding this set of facts is true?A. Sammy may collect the insurance proceeds, so long as he wasn’t guilty of any wrongdoing regarding the destruction of the house.B. Sammy may collect the insurance proceeds because as long as the premium was paid, it’s unnecessary that he have an insurable interest at any time.C. Sammy can’t collect the insurance proceeds because he lacked an insurable interest at the time the policy was purchased.D. Sammy can’t collect the insurance proceeds because he lacked an insurable interest at the time of the loss.16) Louie and Freda married last year, and their income is low. Both are about to graduatefrom college, and over the next few years, their incomes should begin to rise steadily. They would like to buy a house now, as Freda is pregnant, but are afraid it will be a couple of years before they have the income for a mortgage payment. What type of mortgage would you recommend to them?A. Graduated-payment mortgageB. Reverse mortgageC. Deed of trustD. Variable-rate mortgage17) Tom operates a large business, and his business is in financial trouble. Tom wants to continue the business andwork out a plan to deal with his business creditors. He should file bankruptcy under ChapterA. 12.B. 13.C. 7.D. 11.18) Charlie files Chapter 11 bankruptcy. __________ creditors have the right to vote on the plan.A. ImpairedB. NoC. SecuredD. All19) Liza borrows money from First Finance Company for miscellaneous expenses. Liza and First Finance agree thatLiza’s diamond ring shall serve as collateral for the loan. Two weeks later, Liza takes a loan from Second Finance Company listing the same diamond ring as collateral. Neither First Finance nor Second Finance takes any additional steps. Liza defaults on both loans. Second Finance demands possession of the diamond ring and Liza gives it to them. Which of the following statements regarding this set of facts is true?A. Both First Finance and Second Finance possess equal rights in the diamond ring and must equally divide any proceeds from the sale of the ring.B. Second Finance Company possesses the priority claim because it perfected its security interest first.C. First Finance Company possesses the priority claim because it loaned the money to Liza before Second Finance.D. Neither finance company possesses a valid security interest in the diamond ring, and neither possesses any remedy due to the failure to file a financing statement.20) State and federal exemptions are applicable to bankruptcy. Which of the following statements is true in allstates?A. The debtor will use both federal and state exemptions.B. The debtor must use federal exemptions.C. The debtor must use state exemptions.D. The debtor will use either state or federal exemptions.