genral quize

15What documentation grants express authority to an agent?

Agent's contract with the principal

6An Insurance producer wno by contract IS bound to erte Insurance Tor only one company IS CIaSSITIed as a/an

Captive agent

16What term best describes the act of withholding material information that would be crucial to an underwriting decision?

Concealment

45When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

23The authority granted to an agent through the agent's contract is referred to as

Express authority.

44What insurance concept is associated with the names Weiss and Fitch?

Guides describing company financial integrity

49A life insurance policy has a legal purpose if both of which of the following elements exist?

Insurable interest and consent

20Which statement regarding insurable risks is NOT correct?

Insureds cannot be randomly selected.

19Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants

In what way can an agent demonstrate a high standard of ethics?

Putting the client's best interests before their own

46Events in which a person has both the chance of winning or losing are classified as

Speculative risk.

48Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

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

adhesion

14A producer who fails to separate premium monies from his own personal funds is guilty of

commingling

Which of the following best describes an insurance company that has been formed under the laws of this state?

domestic

36An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

foreign

17The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as

loss

The causes of loss insured against in an insurance policy are known as

perils

24All of the following are examples of risk retention EXCEPT

premiums

39A situation in which a person can only lose or have no change represents

pure risk

18Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?

reduction

50After issuing a policy, an insurance company discovers that the policyholder concealed information on the application. The insurance :ompany wants to cancel the policy and give back the money the policyholder has paid. This is an example of

rescission

33For the purpose of insurance, risk is defined as

staThe uncertainty or chance of loss.

26If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

unilateral

2In 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?

unilateral

32Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

implied

42An insured pays a $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

51With respect to the business of insurance, a hazard is

Any condition or exposure that increases the possibility of loss.

40Because 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

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an

Authorized insurer.

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

25Which of the following is the basis for a claim against an insurance policy?

loss

41An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?

Direct response marketing

31Who might receive dividends from a mutual insurer?

Policyholders

29The risk of loss may be classified as

Pure risk and speculative risk.

11Which services are associated with Standard & Poor's and AM Best?

Rating the financial strength of insurance companies

37Peril is most easily defined as

The cause of loss insured against

47 inorming an insurance contract, when does acceptance usually occur?

47 inorming an insurance contract, when does acceptance usually occur?

21Which of the following is the most common way to transfer risk?

Purchase insurance

An agent sells insurance over the phone. One of his applicants is heavily drunk when she applies for and then almost instantly receives her policy. Which of the following is true? The policy is not legal if it can be proven that the applicant was drunk during the application

process.

12Which of the following statements is an accurate comparison between private and government insurers?

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

30Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

Reduction

38In case of a loss, the indemnity provision in insurance policies

Restores an insured person to the same financial state as before the loss.

5An 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?

The policy will not be affected.

22Which of the following is NOT a goal of risk retention?

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

27In insurance, an offer is usually made when

An applicant submits an application to the insurer.

43An 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

35What is a definition of a unilateral contract?

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

28Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

13In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this?

The right to determine the wording of a policy

34Which 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