Quiz 1 questions
an insurance producer who by contract is bound to write insurance for only one company is classified as a/an
Captive agent
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values
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?
Mutual
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
adverse selection is a concept best described as
Risks with higher probability of loss seeking insurance more often than other risks.
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums.
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
Unilateral
In insurance, an offer is usually made when
An applicant submits an application to the insurer
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act.
Marketing
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable since the IRS treats them as a return of a portion of the premium paid.
What is the definition of a unilateral contract
One-sided: only one party makes an enforceable promise
All of the following are examples of risk retention Except
Premiums
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
The loss may be intentional
Which of the following is NOT a characteristic of an insurable risk. a. The loss must be catastrophic b. The loss must be measurable c. The loss must be due to chance d. The loss exposure must be large
The loss must be catastrophic
In terms of parties to a contract, which of the following does NOT describe a competent party?
The person must have at least completed secondary education.
For the purpose of insurance, risk is defined as
the uncertainty or chance of loss
Because an agent is using stationary with the logo of an insurance company, applicant for insurance assume that the agent is authorized to transact on behalf of that insurer.What type of agent authority does this describe?
Apparent
