Exam simulation 4

23. Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? (Choose from the following options) 1. Stock 2. Mutual 3. Reciprocal 4. Fraternal

1. Stock

13. How many long term care policies can be sold to an insured within a 12-month period before the number of policies is considered to be unnecessary? (Choose from the following options) 1. 1 2. 2 3. 3 4. 4

2. 2

29. The agent's authority to transact insurance business for an insurer is effective (Choose from the following options) 1. Once the Commissioner has given approval and the agency receives notice of such approval. 2. As of the date that the notice of appointment is signed. 3. Upon the initial hiring date of the agent. 4. After the mandatory 60-day waiting period for all new agency contracts has expired.

2. As of the date that the notice of appointment is signed.

4. All of the following are reasons an insurer or an insured would have the right to rescind a policy EXCEPT (Choose from the following options) 1. An intentional omission in determining if a warranty is false. 2. The amount of paid claims exceeds the premiums paid. 3. The violation of a material warranty. 4. When concealment is unintentional.

2. The amount of paid claims exceeds the premiums paid.

5. If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be (Choose from the following options) 1. Qualified. 2. Approved. 3. Authorized. 4. Certified.

3. Authorized.

27. An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? (Choose from the following options) 1. Domestic 2. Unauthorized 3. Foreign 4. Alien

3. Foreign

17. All of the following are marketing arrangements used by insurers EXCEPT (Choose from the following options) 1. Independent Agency System 2. Reinsurance System 3. General Agency System 4. Direct Response Marketing System

4. Direct Response Marketing System Right Answer 2. Reinsurance System

15. According to insurance code, it is an unfair or deceptive act in the business of insurance for an insurer to advertise insurance that it does not market. Such action is a violation of the code and will result in a fine up to (Choose from the following options) 1. $10,000. 2. $15,000. 3. $5,000. 4. $7,000

1. $10,000.

7. Any person who engages in any unfair method of competition or deceptive act is liable to the state for a civil penalty and a fine of $5,000 for each act. In addition, if it is determined that the act is willful the fine will NOT exceed (Choose from the following options) 1. $25,000. 2. $50,000. 3. $10,000. 4. $5,000.

1. $25,000. right Answer 3. $10,000.

14. Factual statements about the insured or the risk in an insurance policy are considered (Choose from the following options) 1. Express warranty. 2. Representations. 3. Implied warranty. 4. Material representations.

1. Express warranty.

2. Which of the following best describes a misrepresentation? (Choose from the following options) 1. A statement that is not guaranteed to be true. 2. A statement intended to distract, mislead, or deceive a party to a contract. 3. A failure to disclose known facts. 4. An intentional omission of material information on the part of the insured.

2. A statement intended to distract, mislead, or deceive a party to a contract.

21. When transacting business in this state an insurer formed under the laws of another country is known as a/an (Choose from the following options) 1. Admitted insurer. 2. Alien insurer. 3. Domestic insurer. 4. Foreign insurer.

2. Alien insurer.

1. Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for (Choose from the following options) 1. An administrative penalty of no less than $30,000 and have his/her license revoked. 2. A criminal penalty of up to $10,000. 3. A penalty not to exceed $1,000 per violation. 4. An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

4. An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

9. The failure to disclose known facts is known as (Choose from the following options) 1. Fraud. 2. Warranty. 3. Misstatement. 4. Concealment.

4. Concealment.

6. Which of the following does NOT apply to Errors and Omissions liability contracts? (Choose from the following options) 1. Benefits are usually limited per claim or by the policy period. 2. They are written for the clients of the producer covered by the policy. 3. They are renewable annually. 4. They are written with per-claim deductibles of at least $500.

4. They are written with per-claim deductibles of at least $500. Right Answer 2. They are written for the clients of the producer covered by the policy.

3. An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? (Choose from the following options) 1. Material misrepresentation 2. Waiver 3. Utmost Good Faith 4. Estoppel

1. Material misrepresentation

25. The Standard Fire Policy is a named perils contract, which means (Choose from the following options) 1. Only perils listed in the policy are covered. 2. It covers losses for any peril. 3. It covers the peril in its name under any circumstances. 4. All perils covered must be added through endorsements.

1. Only perils listed in the policy are covered.

26. Bob surrenders his policy. What return of premium will he receive? (Choose from the following options) 1. Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses 2. Nothing 3. His last premium payment 4. All premiums that he has paid up to this point

1. Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses

11. Which of the following would be considered the most important factor in determining the rates and premiums for an applicant for an auto policy? (Choose from the following options) 1. The applicant's driving record 2. The number of miles driven annually 3. The number of years of driving experience 4. The applicant's zipcode

1. The applicant's driving record

24. All of the following must be specified in an insurance policy EXCEPT (Choose from the following options) 1. The financial rating of the insurer 2. The parties between whom the contract is made 3. The risks insured against 4. The period during which the insurance is in force

1. The financial rating of the insurer

22. In property and casualty insurance, insurable interest is defined as the right of a person or entity to property in that such a loss to that property would cause a direct monetary loss to the person or entity. Which of the following statements is TRUE regarding insurable interest in property and casualty insurance? (Choose from the following options) 1. Insurable interest also includes indirect monetary loss to the person or entity. 2. If the insured has no insurable interest, the contract is void. 3. The insurable interest must exist only at the time of application of insurance. 4. Only the owner of the property has insurable interest.

2. If the insured has no insurable interest, the contract is void.

18. Who is responsible for notifying the Commissioner of a licensee's change of address? (Choose from the following options) 1. The licensee's managing general agent 2. The appointing insurer 3. The licensee 4. The agency for which the licensee works

2. The appointing insurer right Answer 3. The licensee

20. Concerning AIDS and HIV risks, all of the following acts may subject an insurer to liability claims or fines EXCEPT (Choose from the following options) 1. Disclosing test results to third party without applicant's consent. 2. Requiring applicant to pay for HIV test in order to be underwritten. 3. Declining applicant for a positive HIV test result. 4. Not providing counseling contacts and educational information about HIV and AIDS.

3. Declining applicant for a positive HIV test result.

10. Representations in insurance contracts qualify as (Choose from the following options) 1. Misrepresentations. 2. Facts. 3. Implied warranties. 4. Expressed warranties.

3. Implied warranties.

16. Fraudulent activities in health care are estimated in billions of dollars annually. This results in (Choose from the following options) 1. Fewer insurance policies being written. 2. Stricter underwriting requirements. 3. Increase in health care costs for everyone. 4. More people going to jail.

3. Increase in health care costs for everyone.

12. In the state of California, who selects the Insurance Commissioner and for how long? (Choose from the following options) 1. General election, for one six-year term 2. The Governor, for one six-year term 3. The Governor, for no more than two four-year terms 4. General election, for no more than two four-year terms

3. The Governor, for no more than two four-year terms Right Answer 4. General election, for no more than two four-year terms

30. Which of the following laws in the Insurance Code define acts that constitute unfair methods of competition? (Choose from the following options) 1. Business Operations 2. Limitations of Authority 3. Unfair Trade Practices 4. Marketing Declarations

3. Unfair Trade Practices

28. An agent has been hired by a local businessowner to determine what type of personal and professional coverage he needs. The agent has determined the businessowner's needs and recommended policies from 3 possible companies. The agent does NOT have an agency contract with any of these companies. The agent is acting as (Choose from the following options) 1. An insurance fiduciary. 2. A nonadmitted insurer. 3. A property and casualty insurance agent. 4. An insurance broker.

4. An insurance broker.

19. All applicants for long term care insurance receive an outline of coverage which (Choose from the following options) 1. Describes in detail all of the terms and conditions of the LTC insurance. 2. Must be presented at the time the policy is delivered. 3. Is an advertisement about long term care insurance benefits. 4. Must be presented at the time or initial solicitation for LTC insurance.

4. Must be presented at the time or initial solicitation for LTC insurance.

8. What is the major difference between a Stock Company and a Mutual Company? (Choose from the following options) 1. Amount of death benefit 2. Number of producers 3. Types of whole life policies 4. Ownership

4. Ownership