Life Insurance- Chapter 1

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

Peril

Insurer (Principal)

The company who issued the insurance policy

Policyholders

Who might receive dividends from a mutual insurer?

Apparent

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

Which of the following statements is an accurate comparison between private and government insurers?

Private insurers may be authorised to transact insurance by State insurance departments

Premium

The money paid to the insurance company for the insurance policy

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

Indemnity

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

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

Which of the following is an example of a producer's fiduciary duty?

The loss must be catastrophic

Which of the following is not a characteristic of an insurable risk?

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

Which of the following is not a goal of risk retention

Private insurers may be authorised to transact insurance by state insurance departments.

Which of the following statements is an accurate comparison between private and government insurers?

Unilatera

lIf only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Insured

person covered by the insurance policy; may or may not be the policy owner

An individual was involved in a head on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe?

Avoidance

Which of the following is not true regarding a certificate of authority

It is issued to group insurance participants

Which of the following is not true regarding a certificate of Authority?

It is issued to group insurance participants.

Insurance policy

A contract between a policy owner and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Agent/Producer

A legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents fo the insurer.

Reciprocity/ Reciprocal

A mutual interchange of rights and privileges

Applicant or proposed insured

A person applying for insurance

Insurance polices are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

What documentation grants express authority to an agent?

Agent's contract with the principal

An insured pays $100 premium every month for his insurance coverage, yet the insurer promises to pay 10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

Which of the following best describes the concept that insured pays a small amount of premium for a large amount of risk on the part of the insurance company

Aleatory

in insurance, an offer is usually made when

An applicant submits an application to the insurer

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

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

Express Authority

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

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called?

Avoidance

Reciprocal

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

Guides describing company financial integrity

what insurance concept is associated with the names Weiss and Fitch?

Which of the following is not a goal of risk retention?

To minimise the insured's level of liability in the event of loss `

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 insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

Hazards is best defined as

Something that increases the risk fo loss

Concealment

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