insurance ch. 1

What documentation grants express authority to an agent? a) Agent's contract with the principal b) Agent's insurance license c) fiduciary contract d) state provisions

a) Agent's contract with the principal

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? a) stock company b) reciprocal association c) fraternal benefit society d) mutual company

c) fraternal benefit society

In terms of parties to a contract, which of the following does NOT describe a competent party? a) the person must be mentally competent to understand the contract b) the person must have at least completed secondary education c) the person must not be under the influence of drugs or alcohol d) the person must be of legal age

b) the person must have at least completed secondary education

in insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? a) conditional b) unilateral c) unidirectional d) aleatory

b) unilateral

All of the following actions by a person could be described as risk avoidance except? a) never flying in an airplane b) not driving after being in an accident c) investing in the stock market d) refusing to scuba dive

c) investing in the stock market

Adverse selection is a concept best described as? a) underwriters slanting the odds in favor of the company b) poor choices of applicants to be covered c) Only offering coverage to good risks d) Risks with higher probability of loss seeking insurance more often than other risks

d) Risks with higher probability of loss seeking insurance more often than other risks

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? a) domestic b) alien c) non-admitted d) foreign

d) foreign

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become? a) smaller b) older c) more active d) larger

d) larger

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) moral b) legal c) physical d) morale

d) morale

which of the following insurers owned by stockholders who have the usual rights of ownership, include the right of voting? a) reciprocal b) fraternal c) stock d) mutual

c) stock

a life insurance policy has a legal purpose if both of which of the following elements exist? a) underwriting and reciprocity b) offer and counteroffer c) policyowners and names beneficiaries d) insurable interest and consent

d) insurable interest and consent

which type of insurance is based on mutual agreements among subscribers? a) mutual insurance b) limited liability c) reinsurance d) reciprocal insurance

d) reciprocal insurance

an insurance company receives an application with come information missing and issues the policy anyway. what is this called? a) estoppel b) subrogation c) aleatory d) waiver

d) waiver

A tornado that destroys property would be an example of which of the following? a) a peril b) a pure risk c) a loss d) a physical hazard

a) a peril

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. When contract characteristic does this describe? a) conditional b) contingent c) aleatory d) unilateral

a) conditional

Events or conditions that increase the chances of an insured loss occurring are referred to as? a) hazards b) exposures c) risks d) perils

a) hazards

which of the following is an example of a producers fiduciary duty? a) the trust that a client places in the producer in regard to handling premiums. b) an obligation to state every known fact about the policy to the producer is selling c) a duty to base all transactions upon the principal of the Utmost Good Faith d) the obligation to tell the truth to the best best of one's knowledge

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