Life insurance set

A tornado that destroys property would be an example of which of the following?

A peril A peril is the cause of loss insured against in an insurance policy.

Hazard

Increase his probability of having a loss

Which of the following entities or individuals evaluates requests for payment by insureds after a loss has occurred?

claims department

warranty

100% truth

What company produces evaluations of insurer financial status often used by the Insurance Department

AM Best & Company

Which of the following types of agent authority is also called "perceived authority"?

Apparent

Speculative Risk

A chance of loss, no loss, or gain.

Morale hazard

A condition of carelessness or indifference that increases the frequency or severity of loss.

An agent is acting ethically in all of the following situations EXCEPT

Always representing the insured.

U.S. vs. South-Eastern Underwriters was decided in 1944. To what extent does the Supreme Court's decision still apply to insurance today?

It still stands in full. Insurance is considered to be interstate commerce and is therefore subject to regulation by the federal government

Competent Parties

Legal age, mentally competent, not under the influence of drugs or alcohol

Which of the following is NOT a characteristic of pure risk?

Loss must be catastrophic

Which of the following organizations defends a state's rights to oversee the insurance industry?

National Conference of Insurance Legislators

Types of Hazards

Physical, Moral, Morale

What is another name for the McCarran-Ferguson Act?

Public Law 15

Which of the following is the most common way to transfer risk?

Purchase insurance The most effective way to handle risk is to transfer it so that the loss is borne by another party. Insurance is the most common method of transferring risk from an individual or group to an insurance company.

Types of risk

Pure and Speculative

A nonadmitted insurer who provides insurance coverages that are not available from an admitted insurer is called

Surplus lines insurer

Moral Hazard

Tendencies towards increased risk

Which of the following led to the creation of the New York Insurance Code, setting a precedent for other states to create their own insurance codes?

The Armstrong Investigation

Paul vs. Virginia was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today?

The decision has changed. Insurance is considered to be interstate commerce and is therefore subject to regulation by the federal government.

Pure Risk

The only risk that can be insured it means you only have a chance of 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?

The policy will not lapse since payment to the agent is the same as a payment to the insurer.

insurance

Transfer of risk

representation

Truth is the person's best of their knowledge

Which of the following departments is responsible for developing mortality and morbidity tables

actuarial

Elements of a legal contract

agreement, consideration, competent parties, legal purpose

An insurance producer who by contract is bound to write insurance for only one company is classified as a/an

captive agent

peril

cause of loss

Physical Hazard

individual characteristics that increase the chances of the cause of loss

What is the term which best describes when a person develops a formal program identifying, evaluating, and funding its losses?

self-insuring

aleatory

unequal exchange

Elements of insurable risk

due to chance, definite and measurable, statistically predictable, not catastrophic, randomly selected and large loss exposure

The authority granted to an agent through the agent's contract is referred to as

express authority

Reciprocal Insurance Exchange

formal risk-sharing arrangement

Liability is usually determined by proving

negligence

beneficiary

one who receives benefits

The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the

states

Which of the following is a characteristic of a Reciprocal Insurance Exchange?

the chief administrator of the insurer is called an "attorney-in-fact"

An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?

Direct response marketing A direct response marketing system effectively bypasses the insurance agent. Business is conducted over the phone, through the mail, or online. This is a perfectly legal approach to selling insurance. It is not mandatory in all situations for the insured to physically sign any documents in order for coverage to go into effect.

Which services are associated with Standard & Poor's and AM Best?

Rating the financial strength of insurance companies

In case of a loss, the indemnity provision in insurance policies

Restores an insured person to the same financial state as before the loss

Which of the following are the authorities that an agent can hold?

express and implied

Events or conditions that increase the chances of an insured loss occurring are referred to as

hazards

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

implied

When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the

insurer

Which of the following insurance providers would be considered a risk sharing arrangement?

reciprocal