SOFE SOFE Certification SOFE-CFE Questions & Answers

• Question 171:

  Which of the following is the correct formula to calculate the unearned premium?

  A. Unearned premium = (Policy premium x Unexpired coverage days) / Total number of days in the policy

  B. Unearned premium = (Interest premium x expired coverage days) / Total number of days in the policy

  C. Unearned premium = (Insurance contracts x Reserve coverage days) / Total number of days in the policy

  D. Unearned premium = (Overhead premium x Unexpired coverage days) / Total number of days in the policy

  Correct Answer: A

• Question 172:

  Gross written premiums are:

  A. written premiums plus net written premiums

  B. indirect written premiums plus direct written premiums

  C. direct written premiums plus assumed reinsurance premiums

  D. direct written premiums plus ceded reinsurance premiums

  Correct Answer: C

• Question 173:

  Net written premiums are:

  A. direct written premiums plus mortgage reinsurance premiums, minus ceded reinsurance premiums

  B. direct written premiums plus assumed reinsurance premiums, minus ceded reinsurance premiums

  C. written premiums plus insurance premiums, minus ceded reinsurance premiums

  D. assumed reinsurance premiums plus credit life insurance premiums, minus depreciated reinsurance premiums

  Correct Answer: B

• Question 174:

  ____________________ are those premiums arising from policies which an insurer accepts, in part or in whole (as the reinsurer), from another insurance company.

  A. Assumed reinsurance premiums

  B. Unearned premiums

  C. Mortgage Insurance premiums

  D. Minimum reserve premiums

  Correct Answer: A

• Question 175:

  The amounts charged the insureds (the policyholders) for insurance coverage are called:

  A. written premium

  B. direct written premium

  C. total premium

  D. defined premium

  Correct Answer: A

• Question 176:

  What is not related to premiums paid to or received from another insurance company, either a company to whom reinsurance is ceded or a company from whom reinsurance is assumed?

  A. written premium

  B. direct written premium

  C. total premium

  D. net written premium

  Correct Answer: B

• Question 177:

  Those premiums arising from policies that an insurer transfers, in part or in whole (as the ceding company

  or reinsured), to another insurance company are called:

  A. transferred premiums

  B. purchase premiums

  C. reserved premiums

  D. ceded reinsurance premiums

  Correct Answer: D

• Question 178:

  The concept of unearned premium is important to the business of insurance for which principal reason?

  A. the concept deals with the recognition of revenue over the period of time in which a policy is inforce.

  B. state insurance laws require each insurer to establish a liability equal to its unearned premiums.

  C. Both A and B

  D. Neither A nor B

  Correct Answer: C

• Question 179:

  At any time during the policy period, the earned premium plus the unearned premium for a policy equals its:

  A. written premium

  B. oral premium

  C. total premium

  D. defined premium

  Correct Answer: A

• Question 180:

  Material amounts must be capitalized and depreciated, and the un-depreciated amount must be reported as a non-admitted asset.

  A. True

  B. False

  Correct Answer: A