Identify the True Statement About Cancellation of an Insurance Policy

question 22

Multiple Choice

Identify the true statement about cancellation of an insurance policy.

• A)Insurance contracts cannot be cancelled by the insured by surrendering the policy to the insurer.
• B)Insurance contracts contain a reinstatement clause that allows an insured to reinstate a cancelled policy.
• C)Insureds who terminate are entitled to a return of the premium on a short-rate basis.
• D)Insurers that cancel need not return the unearned portion of any premiums paid by the insured.

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Definitions:

Social Security Tax

A tax collected by the government to fund the Social Security program, typically levied on both employers and employees to provide retirement, disability, and survivorship benefits.

Federal Income Tax

An annual financial burden put on individuals, corporations, trusts, and various legal bodies by the United States federal government.

Labor Taxes

Taxes imposed on the wages and salaries of employees.

Consumer Surplus

The deviation between the overall amount consumers are keen and able to pay for a good or service against the sum actually paid.