Life and Health Test

Which of the following is NOT a goal of risk retention? ATo minimize the insured's level of liability in the event of loss BTo reduce expenses and improve cash flow CTo increase control of claim reserving and claims settlements DTo fund losses that cannot be insured

To minimize the insured's level of liability in the event of loss

What is the major difference between a stock company and a mutual company? Ownership Amount of death benefit Number of producers Types of whole life policies

Ownership

Which of the following is the closest term to an authorized insurer? Licensed Legal Admitted Certified

Admitted

What documentation grants express authority to an agent? Fiduciary contract State provisions Agent's contract with the principal Agent's insurance license

Agent's contract with the principal

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

Which of the following types of agent authority is also called "perceived authority"? Fiduciary Apparent Express Implied

Apparent

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? ALegal purpose BContract of adhesion CAcceptance DConsideration

Consideration

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? ADomestic BUnauthorized CForeign DAlien

Foreign

In what way can an agent demonstrate a high standard of ethics? Making enough commissions to cover personal expenses Setting and meeting monthly production goals Recommending qualified retirement plans to each client Putting the client's best interests before their own

Putting the client's best interests before their own

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? The insurer will sue the insured for committing fraud. Because the insured is currently not a drug user, his policy will not be affected. The policy will not be affected. The policy will be voided.

The policy will not be affected.

In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this? The right to revoke the policy The right to raise premiums as a result of court rulings The right to determine the wording of a policy The right to refute the rulings

The right to determine the wording of a policy

Which of the following is an example of a producer's fiduciary duty? AAn obligation to state every known fact about the policy the producer is selling. BA duty to base all transactions upon the principle of Utmost Good Faith. CThe obligation to tell the truth to the best of one's knowledge DThe trust that a client places in the producer in regard to handling premiums.

The trust that a client places in the producer in regard to handling premiums.

Events or conditions that increase the chances of an insured loss occurring are referred to as Risks. Perils. Hazards. Exposures.

Hazards

When would a misrepresentation on the insurance application be considered fraud? Never: statements by the applicant are only representations. When the application is incomplete Any misrepresentation is considered fraud. If it is intentional and material

If it is intentional and material

When an individual purchases insurance, what risk management technique is he or she practicing? Retention Transfer Avoidance Sharing

Transfer