Finance 3320 Final Exam

Certain elements are necessary for a particular risk to be insurable. Which of the following would make a risk uninsurable?

the risk of catastrophic (war/nuclear) nature

Which type of risk management techniques are used when the insured buys insurance?

Transfer

Which of the following would be considered competent to enter into a contract?

a person confined to a hospital due to a heart attack

In life insurance the "insurable interest" must exist:

at the time of application only

All of the following are true regarding group life insurance EXCEPT?

group life insurance can be converted only with evidence of insurability

If William is a producer and lives in Texas but travels to Louisiana to solicit a policy of insurance, Williams must have a:

resident license for Texas and a non resident license for Louisiana

when the producer delivers the policy, all of the following should be explained EXCEPT?

Actuarial Calculations

An insurance producer must place the other party's interest above his/her own interest. This responsibility is called:

Fiduciary

The insurer looks at Carol's application and decides to offer Carol a modified policy, including an exclusion Carol did not request. The insurer has

Made a counter offer to Carol

Who receives the certificate of insurance in group insurance?

Member

Statements made on insurance application are considedered:

Representations

All of the following information would be included in a Notice of a Hearing by the Louisiana Department of Insurance Expect

State any precedence established by previous orders

The term used to describe the individual who is covered by the insurance is

the insured

Regarding the Medical Information MIB, all of the following are true EXCEPT?

the insurer is obligated to supply applicants with the information contained in MIB files

In the event of licensed producer's death or disability, a temporary license may be issued to another individual for a period of:

180 days

If Anna is licensed to sell both Life/Health and Personal Commercial insurance, how many hours of continuing education are required every 2 years?

24

A Louisiana resident life producer would be required to complete continuing education in the amount of:

24 CE hours to be completed before biennial renewal date

Upon completion of an examination of an insurer, the Louisiana Department of Insurance must send a written report no later than:

30 days after examination completion

The minimum number of members required to form a group life insurance policy is:

5

Notice of a Hearing involving a producer's misconduct must be made:

5 days in advance of hearing

When group insurance is written on a contributory basis, the minimum participation requirement is:

75%

When representing an insurer, a producer acting as an agent has a responsibility to act with the degree of care that

A reasonable person would apply under similar circumstances

Beth is a 25 - year old who drinks very occasionally, does not smoke, and does not have any known health problems. Beth would probably be classified by an insurer as

A standard risk

Larry was declined insurance coverage based on negative information received in a consumer report. Under the Fair Credit Reporting Act, the producer should do all the following EXCEPT?

Advise Larry of the negative information found in the consumer report

Ken has paid only four premiums on his health insurance policy when he is hit by a car. the insurance company pays out nearly half a million dollars to cover his treatment and a lengthy stay in tensive care. This is an example of

Aleatory Contract

Which of the following is a risk?

An individual may need medical attention after slipping on the ice and falling

The practice of Louisiana Life & Health Guaranty Association charging members in order to pay contractual obligations for an insolvent insurer is called?

Assessment

John fills out an application for a life insurance policy to insure his own life, and for which he plans to pay the premiums. John is playing all the following roles EXCEPT?

Beneficiary

Several producers agree to control the market share of Cajun Mutual Insurance Company. What type of unfair trade practice is this?

Boycott

The failure to disclose know facts is

Concealment

The initial premium payment sent with an application constitutes which part of the formation of an insurance contract?

Consideration

When one party writes the contract and the other party has no input, it is known as a

Contract of adhesion

When an employee terminates membership in an insured group plan, the group life conversion privilege provides which of the following:

Convert to individual policy without evidence of insurability

Which of the following regulates the Medical Information Bureau (MIB)?

Fair Credit Reporting Act

All of the following are true regarding life insurance Except?

Group life insurance can be converted only with evidence of insurability

What is the group member called ?

Insured

All have insurable interest in Joe's life EXCEPT?

Joe's neighbor

Which of the following is NOT likely to be contained in an MIB report?

Mr. Smith was turned down for insurance by two companies in the past year

All of the following are hazards in life insurance EXCEPT?

Premature death

Which of the following is NOT considered an illegal act for a life producer?

Premium saving offered by the insurer because the premium is bank drafted

Which of the following does not have an impact on insurance premium rates

Producer certifacation

If an individual decides to accept the risk associated with a loss and not purchase insurance, they are using what risk managing method?

Retaining

If an applicant is rated or declined an insurance policy, the reasons for this decision will be explained to the applicant by

The producer

All of the following statements are true regarding an actuary EXCEPT?

They select the risk to be insured

The Louisiana Life & Health Guaranty Association would protect all of the following policies EXCEPT?

Variable Annuities

The tendency for less favorable risks to purchase insurance is called:

adverse selection

The policy has the right to do all of the following EXCEPT?

change the conditions of the policy

The policyowner has the right to do all of the following EXCEPT?

change the conditions of the policy

The application of the law of large numbers enables insurers to

estimate the future losses of a class or group of people

A group life underwriter would be concerned about all of the following EXCEPT?

individual health problems

Speculative risk involves of the following EXCEPT?

insurance

What is the group member called?

insured

If an applicant for life insurance lies on the application regarding a material fact, it is called?

misrepresentation

All of the following are considered sources of underwriting information of the applicant EXCEPT?

mortality tables

Which of the following is correct about the group life conversion privilege?

must be made available for 31 days

All of the following are possible premium modes EXCEPT?

nine months

Abby, a licensed producer, is moving to Kansas. What is Abby's responsibility under the Louisiana Insurance Code?

notify the Louisiana Department of Insurance of address with 30 days

When an applicant completes a non-medical application, receives a conditional receipt with premium payment, and proves to be insurable, the insurance coverage will begin:

on the date of the application

The Louisiana Life & Health Insurance Guaranty Association:

requires all authorized insurers in the State be member of the Association

Which of the following penalties can the Louisiana Department of Insurance impose?

return of commission from life insurance sale considered to be unfair trade practice.

If the Louisiana Department of Insurance suspects a producer is using "Unfair Trade Practices," the first action taken is to:

send notice of a hearing

A person who gathers information, analyzes exposures, and selects risk for the insurer is a called(n):

underwriter

Group life insurance:

written on a one year level term policy basis