general insurance review question quiz

Which type of an insurance company would an agent not be permitted to represent: A) An Authorized Insurer B) An Admitted Insurer C) A Non-admitted Insurer D) An agent could represent all of the above

A Non-admitted Insurer

21. Reinsurance is defined as: A) When an insurance company decides to buy out another insurance company B) When an insurance company takes over more than 50% of the shares of another insurance company C) A contract when one insurance company indemnifies another insurance company for part or all of its liabilities D) None of the above

A contract when one insurance company indemnifies another insurance company for part or all of its liabilities

An Insurance company that has received a Certificate of Authority from the State Insurance Commissioner is now considered an __________ carrier of New York? A) Admitted or Authorized B) Domiciled C) Localized D) All of the Above

A) Admitted or Authorized

Which is not considered an element of an Insurable risk: A) Losses that do not occur by chance B) Losses that are definite and measurable C) Losses that are not catastrophic D) Losses that are statistically predictable

A) Losses that do not occur by chance

18. Stock companies generally issue: A) Non participating policies B) Participating policies C) Both participating and non-participating policies D) Neither A or B

A) Non participating policies

10. If Joey intentionally decided to conceal the fact that he was treated for cancer 5 years ago on an application for insurance, Joey has committed: A) Fraud B) An act of concealment C) A material misrepresentation D) All of the above

All of the above

Which is true of life Insurance policy contracts issued in New York: A) They must be written in a clear and coherent manner B) Contracts must words with common and everyday meanings so they are understandable C) The text must be printed in minimum 10 point type D) All of the above

All of the above

28. An Insurance company chartered and incorporated in Paris, France but is doing business in New York is called: A) An outside Insurer B) A Foreign Insurer C) An Alien Insurer D) A non domiciled Insurer

An Alien Insurer

24. Which would be considered an example of a speculative risk? A) An insurance policy paying the full value on a house that burned down B) Insuring against the risk of becoming disabled C) Investing in real estate or marketable investment securities D) Insuring against the risk of premature death

C) Investing in real estate or marketable investment securities

Marty, and independent contractor, has been advised to purchase disability insurance to protect his income should he become disabled. However, Marty ignores the advice of his agent and decides to set up his own personal savings plan instead, rather than spend premiums on a policy. What method of risk management is Marty choosing to pursue? A) Reduction B) Sharing C) Retention D) Transfer

C) Retention

Which is not considered to be an element of an insurable risk? A) Loss due to chance B) The Law of Large Numbers C) Catastrophic losses D) Statistically measurable data

Catastrophic losses

2. A Peril generally: A) Causes a loss B) Contributes to profits of an insurance company C) Doesn't normally contribute to a loss D) None of the above

Causes a loss

38. Which is not an example of social insurance programs offered by State and local governments? A) National Flood Insurance B) Social Security Disability Insurance C) Life insurance offered to association members D) Medicare

Life insurance offered to association members

Which of the following would not be considered an "Exposure Unit" that determines rates charged for insurance coverage: A) Age of the insured B) Medical history C) Marital status D) Sex

Marital status

Which statement would best represent the concept of the Law of Large Numbers: A) Measuring potential loss expectancy of a homogenous group of people of less than 50 B) Measuring potential loss expectancy of a homogenous group of people of less than a 1000 C) Measuring potential loss expectancy of a homogenous group of people of more than 10,000 but less than a million D) Measuring potential loss expectancy of a homogenous group of people of 1 million or more

Measuring potential loss expectancy of a homogenous group of people of 1 million or more

31. Henry, enters the basement of his home and notices a damp musky smell, and he see's what appears to be mold spores covering much of his basement walls. Six months later, Henry has done nothing to address the conditions in his basement. What type of hazard would Henry represent? A) Moral Hazard B) Morale Hazard C) Physical Hazard D) Both Moral & Morale Hazard

Morale Hazard

5. Which type of Insurance company is said to be a "Participating" Insurer? A) Mutual Companies B) Fraternal Organizations C) Stock Companies D) Risk Retention Organizations

Mutual Companies

An insurance contract defined as being "Unilateral" means: A) Two parties entering into the contract are both subject to making legally enforceable promises B) Only one party (the Insurer) is subject to making legally enforceable promises C) Neither the Insurer of insured is subject to making legally enforceable contracts D) The insured is subject to legally enforceable promises, i.e. paying the premium

Only one party (the Insurer) is subject to making legally enforceable promises

36. If you replaced smoke detectors in your home, decided to join a gym to improve one's health, or cut down on cigarette smoking, which method of risk management is being employed? A) Transfer B) Retention C) Reduction

Reduction

9. What are the statements made on an application for insurance that are said to be statements believed to be true? A) Warranties B) Representations C) Misrepresentations D) Considerations

Representations

11. Paying a deductible on an auto policy, or paying coinsurance on a medical policy is an example of what kind of Risk Management strategy? A) Transfer B) Sharing C) Retention D) Avoidance

Sharing

1. Which is a type of risk generally considered uninsurable by an insurance company? A) Pure Risk B) Speculative Risk C) Both A & B D) Neither A or B

Speculative Risk

This person is the person covered under a life insurance policy, whose life expectancy is calculated by the insurer: A) The policy owner B) The applicant C) The Insured D) The producer

The Insured

17. Warranty Statements are generally made by the: A) The insured B) The agent C) The Insurer D) The policy owner

The Insurer

35. Insurance is the concept of sharing risk amongst a large pool of people with similar exposure to loss. This principle by which the Insurance company calculates future losses is the basis for: A) The Law of Predictable Losses B) The Law of Large Numbers C) The Law of Life Expectancy D) The Principle of Shared Risks

The Law of Large Numbers

4. Insurance companies determine their mortality calculations based on which principle: A) The Law of Adverse Selection B) The Mortality Principle C) The Law of Large Numbers D) The Law of Averages

The Law of Large Numbers

3. What is considered to be the most effective method of managing a risk? A) Retention B) Transfer C) Sharing D) Avoidance

Transfer

When you buy an insurance policy, you are employing what method of risk management? A) Sharing B) Retention C) Transfer D) Elimination

Transfer

37. An Insurer can protect itself against adverse risks by doing all of the following except: A) Charge a higher rate for insurance coverage B) Decline a risk C) Transfer the risk to another insurer D) Decide to do A or B

Transfer the risk to another insurer

Which of the following is not considered to be an element that makes up a legal contract: A) Legal in purpose B) Competent parties C) Unilateral D) Consideration

Unilateral

An insurance contract is considered to be a contract of "Adhesion" because: A) The insured is not obligated to pay the premiums B) The Insurer allows the insured input as to how their policy contract is drawn up C) Any ambiguity in the wording of the contract is held against the Insurer in court, because the insurer writes the contract D) The law allows the Insurer to enforce penalties on the policy owner if conditions of the contract have not been met

Any ambiguity in the wording of the contract is held against the Insurer in court, because the insurer writes the contract

Which is an example of a Moral Hazard? A) An individual who engages in reckless behavior B) A person who does not tell the truth on an application for insurance C) A person who does not lie an on application D) All of the above

B) A person who does not tell the truth on an application for insurance

40. Which party would not be considered an incompetent to enter into an insurance contract: A) An individual under the age of 14 ½ B) An Authorized Insurer C) A non admitted insurer D) An individual under the influence of drugs or alcohol

B) An Authorized Insurer

29. Implied Authority is defined as: A) Any business activity carried out by an agent that is deemed to be a prohibitive sales activity B) Any business activity carried out by an agent that is considered to be typical or standard business activity i.e. collecting and remitting premiums C) A type of authority that an agent should never assume D) A type of authority directly granted to an agent by the Insurer

B) Any business activity carried out by an agent that is considered to be typical or standard business activity i.e. collecting and remitting premiums

6. A company domiciled in Green bay, Wisconsin but is doing business in NY state would be called a: A) Domestic Insurer B) Foreign Insurer C) Alien Insurer D) Authorized Insurer

B) Foreign Insurer

Indemnity is best defined as the concept: A) By which an insurer will partially or wholly reimburse for a financial loss B) Where the Insurer can in some instances pay more than the loss that was incurred C) An Insurer has the right to deny reimbursing for a loss if there is an indication of misrepresentation D) None of the above

By which an insurer will partially or wholly reimburse for a financial loss

Harry, has recently been approved for membership to a Lodge in his neighborhood, where he will enjoy member benefits, including the opportunity to purchase insurance benefits. What is the type of organization Harry has joined? A) An Association B) A Group Blanket Insurance Membership C) A Participating Insurer D) A Fraternal Organization

D) A Fraternal Organization

39. Ratings companies like Standard & Poors or AM Best will generally rate an Insurer based on what criteria? A) Claims history B) Financial reserve standards C) Overall financial strength D) All of the above

D) All of the above

7. Which is the type of an Agency Distribution system where an agent is considered a "captive" agent, and can only sell for one insurance company? A) Exclusive Agency System B) Managerial System C) General Agency System D) Independent/Broker System

Exclusive Agency System

8. Under the "Principle of Agency" or "Law of Agency" what is considered to be the direct authority granted to an agent representing an insurance company? A) Direct Authority B) Implied Authority C) Express Authority D) Apparent Authority

Express Authority