property & casualty

what is the term for the entity that an agent represents regarding contractual agreements with third parties? a. designee b. insured c. principal d. client

principal

a situation in which a person can only lose of have no change represents a. speculative risk b. adverse selection c. hazard d. pure risk

pure risk

hazard is best defined as: a. neglect to communicate a material fact b. a deliberate attempt to deceive c. something that increases the risk of loss d. the uncertainty of loss

something that increases the risk of a loss

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

the person must have at least completed secondary school

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? a. implied b. assumed c. apparent d. express

apparent

which of the following types of agent authority is also called "perceived authority"? a. fiduciary b. apparent c. express d. implied

apparent

which of the following is unit of measurement an underwriter uses when determining the premium rates for insurance? a. risk b. exposure c. loss d. hazard

exposure

an insurance company is domiciled in montana and transacts insurance in wyoming. which term best describes the insurer's classification in wyoming? a. unauthorized b. foreign c. alien d. domestic

foreign

in insurance transactions, fiduciary responsibility means a. being liable with respect to payment of claims b. commingling premiums with agent's personal funds c. handling insurer funds in a trust capacity d. maintaining a good credit record

handing insurer funds in a trust capacity

the insurer may suspect that a moral hazard exists if the policyholder a. is prone to depression b. is indifferent to activities that may be dangerous c. always drives over the speed limit d. is not honest about his health on an application for insurance

is not honest about his health on an application for insurance

an individuals tendency to be dishonest would be indicative of a a. pure hazard b. physical hazard c. moral hazard d. morale hazard

moral hazard

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. physical b. morale c. moral d. legal

morale

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? a. nonprofit service organization b. stock c. mutual d. reciprocal

mutual

what is the major difference between a stock and a mutual company? a. types of whole life policies b. ownership c. amount of death benefit d. number of producers

ownership

a participating insurance policy may do which of the following? a. pay dividends to the policy owner b. provide group coverage c. pay dividends to stockholder d. require 80% participation

pay dividends to the policyowner

in what way can an agent demonstrate a high standard of ethics? a. making enough commissions to cover personal expenses b. setting and meeting monthly production goals c. recommending qualified retirement plans to each client d. putting the client's best interests before their own

putting their client's best interests before their own

if a court ordered payment for a loss that was not covered in the policy, even if it was clearly worded, is an example of which of the following? a. reasonable expectations b. cease & desist c. nonforfeiture d. indemnity

reasonable expectations

following 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? a. reduction b. transfer c. avoidance d. retention

reduction

which of the following insurers are owned by stockholders? a. stock b. mutual c. reciprocal d. fraternal

stock

when transacting business in this state an insurer formed under the laws of another country is known as a/an a. alien insurer b. domestic insurer c. foreign insurer d. admitted insurer

alien insurer

what is a foreign insurer? a. an insurer with licensed agents doing business in other countries b. an insurer with licenses agents who are citizens in more than one country c. an insurer with a home office in another state d. an insurer with a home office in another country

an insurer with a home office in another state

which of the following must an insurer obtain in order to transact insurance within a given state? a. certificate of authority b. producers certificate c. business entity license d. insurer's license

certificate of authority

because an insurance policy is a legal contract, it must conform to the state laws governing contract which require all of the following elements except a. consideration b. legal purpose c. offer and acceptance d. conditions

conditions