ExamFX General Insurance Practice Quiz

Insurance is the transfer of a. risk b. loss c. hazard d. peril

a. risk insurance is the transfer of financial responsibility associated with a potential of a loss(risk) to an insurance company

Units with the same or similar exposure to loss are referred to as a. insurable risks b. law of large numbers c. homogeneous d. catastrophic loss exposure

c. homogeneous The basis of insurance is sharing risk between a large homogeneous group with similar exposure to loss

What do individuals use to transfer their risk of loss to a larger group? a. exposure b. indemnity c. insurance d. insurable interest

c. insurance Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

If an insurance premium is paid by the policyowner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true? a. the premium will be taken out of the Guaranty Association funds b. The agent's license will be automatically revoked c. The policy will lapse since the premium was not received by the insurer d. The policy will not lapse since payment to the agent is the same as a payment to the insurer

d. The policy will not lapse since payment to the agent is the same as a payment to the insurer Since the agent is a representative of the insurer, payment to the agent represents payment to the company. After a hearing, the agent's license could be revoked for engaging in such acts.

Which of the follow best describes an independent producer? a. a producer who is self-employed only b. an insurance agency who employs only captive producers c. a producer who sells many types of policies for only one company d. a producer who works for themselves or other agents

d. a producer who works for themselves or other agents Independent agents sell the insurance products of several companies and work for themselves or other agents. The independent agent owns the expiration of the policies he/she sells, meaning they may place that business with another insurer upon renewal if in the best interest of the client.