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:

Market Economy

An economic system in which economic decisions and the pricing of goods and services are guided solely by the interactions of citizens and businesses.

Equilibrium Quantity

At the market equilibrium price, the amount of goods or services that are supplied matches the amount that is demanded.

Equilibrium Price

A pricing point in the market where the supply of goods meets the demand for those goods.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where supply equals demand in a market.