CPCU 520 Practice Test Questions with Correct Answers | 100% Verified 2025

CPCU 520 Practice Test Questions with Correct Answers | 100%
Verified 2025

QUESTION: Which one of the following functional areas of Keithly can assist Alex with this audit's irregularity?
✓✓Correct Ans- Special Investigation Unit



QUESTION: Which one of the following best describes a FAIR plan and its insureds? ✓✓Correct Ans- State-run
plans with cost spread among private insurers in the state



QUESTION: Which one of the following departments provides information to the underwriting department to
assist in selecting and rating risks? ✓✓Correct Ans- Risk control



QUESTION: All corporations are obligated to promote the well-being of society. At the minimum, this
obligation demands that the insurer should ✓✓Correct Ans- Avoid causing any public harm.



QUESTION: Which one of the following insurer functions includes calculating insurance rates, developing rating
plans, estimating loss reserves, and providing predictive modeling services? ✓✓Correct Ans- Actuarial



QUESTION: Property-casualty insurers can be classified in which one of the following ways? ✓✓Correct Ans-
Licensing status



QUESTION: Which one of the following statements is correct with regard to an insurer's goals? ✓✓Correct Ans-
A proprietary insurer must earn competitive profits to raise the capital needed to operate.



QUESTION: The United States regulatory framework has evolved over time into which one of the following
approaches used by insurance regulators today? ✓✓Correct Ans- Risk-focused approach



QUESTION: Which one of the following statements regarding licensing of insurers or insurance personnel is
true? ✓✓Correct Ans- Some states permit the insurance commissioner to deny a license to an otherwise
worthy applicant if the commissioner believes that no additional insurers are needed in the state.



QUESTION: Which one of the following statements is correct? ✓✓Correct Ans- If insurers become insolvent,
future claims might not be paid and the insurance protection already paid for might become worthless.




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, QUESTION: One way state insurance regulators help to protect consumers is by reviewing insurance policy
forms to determine whether they benefit consumers and ✓✓Correct Ans- Comply with state consumer
protection laws.



QUESTION: Every state insurance department is headed by a state insurance commissioner, a director, or by a
✓✓Correct Ans- Superintendent.



QUESTION: How often does the National Association of Insurance Commissioners (NAIC) meet to discuss
important problems and issues in insurance regulation? ✓✓Correct Ans- Three times a year



QUESTION: Which one of the following statements is correct? ✓✓Correct Ans- An insurer does not know what
its actual expenses will be when a policy is sold.



QUESTION: Filip is quoting to get Osakri's business and is not concerned with the adequacy of Mellfor's
coverage with actual cash value on contents. Filip's behavior involving Osakri is known as ✓✓Correct Ans-
Twisting.



QUESTION: All states attempt to ensure that continuous auto insurance coverage is available to consumers by
✓✓Correct Ans- Restricting the rights of insurers to cancel or nonrenew personal auto insurance policies



QUESTION: Under the terms of her agency contracts, the insurers forward policies promptly to Rhonda's
customers and send a premium invoice with the policy. Insureds are instructed to remit premium payments to
their insurer. The insurers calculate Rhonda's commissions and forward those commission payments to her
monthly. Rhonda is operating under which one of the following payment procedures? ✓✓Correct Ans- Direct
bill basis



QUESTION: Omicron Manufacturing has approached Delta Insurance Brokerage to develop and implement a
voluntary insurance program for life, health, and disability insurance for Omicron's employees. Delta puts
together a program in which employees receive the coverage at discounted rates, and premiums are deducted
from the employees' paychecks. Omicron and Delta are using which one of the following types of group
marketing to offer this program? ✓✓Correct Ans- Franchise marketing



QUESTION: The principal method of determining a prospect's insurance needs is through ✓✓Correct Ans-
Completing a risk management review for the prospect.



QUESTION: An agency bill process in which the producer is usually not required to pay the insurer until the
premium is collected from the policyholder is known as ✓✓Correct Ans- The item basis.


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