General Insurance

Which of the following is considered to be a morale hazard? A Smoking B Working as a firefighter C Engaging in illegal activities D Driving recklessly

D Driving recklessly

Risk Retention

1. fund losses can not be insured 2. Reduce expenses and improve cash flow 3. increase control of claim reserving and claim

Insurable risks

1. insurable risk needs to be statistically predictable 2. insurable risk must involve a loss definite 3. Insurance can not be mandatory 4. insureds can be randomly selected

When transacting business in this state an insurer formed under the laws of another country is known as a/an A Alien insurer. B Domestic insurer. C Foreign insurer. D Admitted insurer.

A Alien insurer.

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? A Conditional B Adhesion C Personal D Unilateral

A Conditional

What is the term for the entity that an agent represents regarding contractual agreements with third parties? A Designee B Insured C Principal D Client

A Designee B Insured C Principal D Client C Principal

Which of the following best describes an insurance company that has been formed under the laws of this state? A Domestic B Sovereign C Alien D Foreign

A Domestic

What insurance concept is associated with the names Weiss and Fitch? A Guides describing company financial integrity B Policy dividends C Types of mutual companies D Index used by stock companies

A Guides describing company financial integrity

Surplus Lines insurance usually involves insurance for which type of individuals? A High-risk individuals B Standard risk individuals C Low-risk individuals D All of these qualify for surplus lines insurance

A High-risk individuals

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A Implied B Apparent C Assumed D Express

A Implied

risk intention group A It is a benefit society formed to provide insurance for members of an affiliated lodge. B It is a company owned by the stockholders that provides nonparticipating policies. C It is a liability insurance company owned by its members. D It provides support for underwriters and is not an insurance company.

A It is a benefit society formed to provide insurance for members of an affiliated lodge. B It is a company owned by the stockholders that provides nonparticipating policies. C It is a liability insurance company owned by its members. D It provides support for underwriters and is not an insurance company. C

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of A Misrepresentation. B Fraud. C Warranty. D Concealment.

A Misrepresentation. B Fraud. C Warranty. D Concealment. D

mutual agreement among subscribers A Mutual insurance B Limited liability C Reinsurance D Reciprocal insurance

A Mutual insurance B Limited liability C Reinsurance D Reciprocal insurance D

All of the following would be considered an insurance transaction EXCEPT A Obtaining an insurance license. B Soliciting a policy. C Advising a policyholder regarding a claim. D Negotiating coverage.

A Obtaining an insurance license.

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

A Risks. B Perils. C Hazards. D Exposures. C Hazards

to legally transact insurance in this state A) Certificate of Insurance B) Certificate of Authority C) Power of Attorney D) Business entity license

A) Certificate of Insurance B) Certificate of Authority C) Power of Attorney D) Business entity license Answer: B) Certificate of Authority

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A Aleatory. B Personal. C Unilateral. D Conditional.

D Conditional.

insurance policies are not drawn up through negotiations

Adhesion

authorized insurer

An authorized insurer is an individual or a company with approval from the responsible authority, as per the state, to conduct the business of issuing insurance coverage in a given state.

Agent Authority called perceived authority

Apparent

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A Self-insurer. B Authorized insurer. C Local insurer. D Certified insurer.

B Authorized insurer.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? A Physical B Morale C Moral D Legal

B Morale

What is a definition of a unilateral contract? A If one party makes a condition, the other party can counteroffer. B One-sided: only one party makes an enforceable promise. C Two or more parties go into a contract understanding there may be an unequal exchange of value. D One author: the company wrote the contract; the insured must accept it as written.

B One-sided: only one party makes an enforceable promise.

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

B Putting the client's best interests before their own

Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? A Consumer's guide B SEC C AM Best D NAIC

C AM Best

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? A Implied B Assumed C Apparent D Express

C Apparent

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

C If it is intentional and material

The causes of loss insured against in an insurance policy are known as A Risks B Hazards C Perils D Losses

C Perils

Which of the following is NOT the consideration in a policy? A The premium amount paid at the time of application B The promise to pay covered losses C The application given to a prospective insured D Something of value exchanged between parties

C The application given to a prospective insured

Which of the following is a characteristic of a Reciprocal Insurance Exchange? A Stock holders share in any profits B Issues nonassessable policies C The chief administrator of the insurer is called an "attorney-in-fact". D Normally write all lines of insurance

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

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? A Subrogation B Aleatory C Waiver D Estoppel

C Waiver

contracts that are prepared by one party and submitted to the other party on a take it or leave it

Contract of Adhesion

An insurance contract must contain all of the following to be considered legally binding EXCEPT A Offer and acceptance. B Consideration. C Competent parties. D Beneficiary's consent.

D Beneficiary's consent.

A producer who fails to segregate premium monies from his own personal funds is guilty of A Larceny. B Embezzlement. C Theft. D Commingling.

D Commingling.

The requirement that agents not commingle insurance monies with their own funds is known as A Premium accountability. B Express authority. C Accepted accounting principal. D Fiduciary responsibility.

D Fiduciary responsibility.

An insurance organization that does not issue insurance policies but provides a meeting place for underwriters to conduct business is known as a A Fraternal society. B Mutual company. C Capital stock company. D Lloyd's association.

D Lloyd's association.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A Paid at a fixed rate every year. B Taxable as ordinary income. C Guaranteed. D Not taxable since the IRS treats them as a return of a portion of the premium paid.

D Not taxable since the IRS treats them as a return of a portion of the premium paid.

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

D Ownership

Which of the following insurance options would be considered a risk-sharing arrangement? A Stock B Mutual C Surplus lines D Reciprocal

D Reciprocal

Events in which a person has both the chance of winning or losing are classified as A Insurable. B Pure risk. C Retained risk. D Speculative risk.

D Speculative risk.

insurer meets the requirements and is approved to transact business

authorized

Phone TV ad

Direct response marketing

adverse selection insurance

In the insurance industry, adverse selection refers to situations in which an insurance company extends insurance coverage to an applicant whose actual risk is substantially higher than the risk known by the insurance company.

insurance is a contract by which one seeks to protect another from

Loss

method to protect from catastrophic losses

Reinsurance

the insured is not legally bound to any particular action in the insurance contract, the insurer is legally obligated to pay losses covered by the policy

Unilateral

what documentation grants express authority to an agent

agent's contract with the principal

unequal amounts exchanged between payments and benefits

aleatory contract

foreign insurer

an insurer domiciled in the United States but outside the state in which the insurance is to be written

transfer insurance, need to do?

certificate of authority

applicant hold the info

concealment

statistical prediction of loss which rates for insurance

law of large numbers

Stated incorrect health condition

material misrepresentation

transfer insurance policy to friend

need written consent of the insurer

cause of loss insured against in an insurance policy

peril 危險

insurance a risk sharing arrangement

receiprocal互惠