Life insurance exam

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When risks with higher probability of laws are seeking insurance more often than other risks this is often known as what?

Adverse selection

According to the law of agency a principal is represented by whom?

Agent or producer

What type of insurer is formed under the laws of another country?

Alien

What is a warranty in an insurance contract?

An absolute true statement upon which the validity of the insurance contract is based

If an insurer meets the states financial requirements and is approved to transact business in the state it is considered what type of insurer?

Authorized or admitted

What document is required for an insurance company to transact insurance?

Certificate of authority

When a change needs to be made on the application for insurance which is the best method for collecting the information?

Complete a new application or ask the applicant to initial the correction on the original application

What are the three types of agent authority?

Express, implied and apparent

The requirement that agents must account for and properly remit all insurance funds collected is known as what type of agent responsibility?

Fiduciary

An insurance company is domiciled in California and transact insurance in Nevada what is the insurers classification in Nevada?

Foreign

An insurance company that is formed under the laws of another state is known as what type of insurer?

Foreign

Conditions that increase the chance of a loss are known as what?

Hazards

What type of report provides information about the applicants hobbies habits and financial status?

Inspection report

What two elements are necessary for a life insurance contract to have a legal purpose?

Insurable interest and consent

What do individuals use to transfer their risk of loss to a larger group?

Insurance

Whom does an insurance agent represent?

Insurance company

In the agent/insure a relationship who is considered the principal?

Insurer

When agents act within the scope of their contract their actions will be assumed to be the acts of whom?

Insurer

What entitles make up the medical information bureau?

Insurers

Insurance is a contract that protects the insured from what?

Loss

The reduction decrease or disappearance of value of the person or property insured in a policy is known as what?

Loss

What are the five characteristics of an ideally insurable risk?

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.

An insurance policy paid a non-taxable dividend to the insured one year and nothing the next from what type of insurer did the insured purchase the policy?

Mutual

The type of insurance company organize to return any surplus money to its policyholders is known as what?

Mutual company

What is the term for the causes of loss insured against an insurance policy?

Peril

What are the three types of hazards?

Physical, Moral, Morale

What type of risk is insurable?

Pure

A situation in which a person can only experience a loss and no gain represents what type of risk?

Pure risk

What are the strategies used by underwriters to prevent adverse selection?

Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate

What is the best way to handle incomplete insurance applications?

Return the application to the applicant for completion

If an agent fails to obtain the applicant signature on the insurance application what must the insurer do?

Send the application back to the applicant for signature

Wagering on a sporting event is known as what type of risk?

Speculative

The insurer organized to return a profit to the stockholders is what type of insurer?

Stock company

If an applicant does not receive his or her insurance policy who would be held responsible?

The agent

Who's responsibility is it to determine that all the questions on an insurance application are answered?

The agents

For the purpose of insurance what is risk?

Uncertainty of loss

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

In insurance when is the offer usually made on a contract?

When the insurance application is submitted

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

When the insurer approves a prepaid application

When does an insurance policy go into effect?

When the policy is delivered and the premium is paid

What are the four elements of an insurance contract?

agreement, consideration, competent parties, legal purpose

Insurers are classified according to their domicile what are the three types of insurers?

domestic, foreign, alien

An application conceals relevant health information on the application the applicant presents what type of hazard?

moral

A person who does not lock the doors to his or her house shows an indifferent attitude this person presents what type of hazard?

morale

Who owns stock companies?

stockholders


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