General Insurance Exam FX 15 Questions
The policy will not be affected.
An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?
Captive Agent
An insurance producer who by contract is bound to write insurance for only one company is classified as a/an
The uncertainty or chance of loss.
For the purpose of insurance, risk is defined as
Restores an insured person to the same financial state as before the loss.
In case of a loss, the indemnity provision in insurance policies
unilateral
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?
Handling insurer funds in a trust capacity
In insurance transactions, fiduciary responsibility means
An applicant submits an application to the insurer.
In insurance, an offer is usually made when
The loss may be intentional.
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT
Avoidance
The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called
Agent's contract with the principal
What documentation grants express authority to an agent?
ownership
What is the major difference between a stock company and a mutual company?
transfer
When an individual purchases insurance, what risk management technique is he or she practicing?
Apparent
Which of the following types of agent authority is also called "perceived authority"?
Policyholders
Who might receive dividends from a mutual insurer?
Commingling
A producer who fails to segregate premium monies from his own personal funds is guilty of
The loss must be catastrophic.
Which of the following is NOT a characteristic of an insurable risk?
Investing in the stock market
All of the following actions by a person could be described as risk avoidance EXCEPT
Concealment
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
Mutual
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Exchange of unequal values
Which of the following best describes the aleatory nature of an insurance contract?
Reciprocal
Which of the following insurance options would be considered a risk-sharing arrangement?
Stock
Which of the following insurers are owned by stockholders?
The application given to a prospective insured
Which of the following is NOT the consideration in a policy?
Risks with higher probability of loss seeking insurance more often than other risks.
Adverse selection is a concept best described as
The person must have at least completed secondary education.
In terms of parties to a contract, which of the following does NOT describe a competent party?
Pay dividends to the policy owner
A participating insurance policy may do which of the following
The person must have at least completed secondary education
In terms of parties to a contract, which of the following does NOT describe a competent party?
Putting the client's best interests before their own
In what way can an agent demonstrate a high standard of ethics?
Loss
The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as
Warranty
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
