Which one of the following is an opportunity cost of insurance?

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Which one of the following is an opportunity cost of insurance?

A. The payment of commissions to agents
B. An insurer's loss on invested premiums
C. An insured's funds that could be invested elsewhere if purchasing insurance were not necessary
D. The cost of claims payments that would not have been necessary if insureds' carelessness had not caused losses

Answer: C. An insured's funds that could be invested elsewhere if purchasing insurance were not necessary is an example of an opportunity cost of insurance.

Assignment Questions

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000 Answer: B

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The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

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