Which of the Following Statements Is True About Cancellation of an Insurance

question 31

Multiple Choice

Which of the following statements is true about cancellation of an insurance policy?

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

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Definitions:

Future Value

The value of a current asset at a future date based on an assumed rate of growth over time, calculated using compounding interest.

Interest

The cost of borrowing money or the return on investing capital, typically expressed as a percentage rate.

College Education

An advanced level of formal learning often pursued after high school, typically at a college or university.

Set Aside

To reserve or earmark funds or resources for a specific purpose, often used in legal, financial, or planning contexts.