AD BANKER REVIEW FOR CHAPTER 1: General Insurance

An insurer which is formed under the laws of another country is a(n): Domestic insurer Non-authorized insurer Alien insurer Foreign insurer

Alien insurer (organized in another COUNTRY)

Which of the following would be considered legally competent to enter into a contract? A 25-year-old self-employed person A 13-year-old honor student A person deemed to be mentally incapacitated A person who is under the influence of drugs or alcohol

A 25-year-old self-employed person

Insurable interest for life insurance is necessary only at the time of: Death Application Policy delivery Policy renewal

Application (It is not required at any later point in time.)

Before an insurer can operate in this state, it must have which of the following? Articles of Incorporation filed with the Secretary of State Approval of the National Association of Insurance Commissioners (NAIC) Certificate of Authority issued by the state Insurance Department State Governor's approval

Certificate of Authority issued by the state Insurance Department. (Required for an insurer to operate in most states whether the insurer is domestic, foreign, or alien.)

The ____________ has the power to issue rules and regulations to help enforce insurance statutes. Legislative branch Commissioner Executive branch Judicial branch

Commissioner

_________ occur when known information is not communicated.

Concealments (not communicated)

__________ are primarily social organizations that engage in charitable and benevolent activities consisting of members of a given faith, lodge, or order, and are usually organized as non-profits. Lloyds of London Syndicates Trade Associations Fraternal Benefit Societies Stock Insurance Companies

Fraternal Benefit Societies

The National Association of Insurance Commissioners (NAIC):

Has no legal authority over insurance regulation (promotes uniformity in the interpretation of insurance)

Under the Fair Credit Reporting Act, which of the following statements is CORRECT? The reporting company can provide confidential information to anyone requesting it If an individual is denied coverage, they can request a copy of the report The reporting agency has no responsibility to investigate inaccurate information The Act is designed to protect reporting agencies from the public

If an individual is denied coverage, they can request a copy of the report. (FCRA is designed to protect the public and requires the reporting agency to investigate disputed information.

Which of the following manufactures and sells insurance coverage in the form of insurance policies or contracts of insurance? Insurance agencies Insurance companies Applicants/insureds Insurance agents

Insurance companies (Only insurers can manufacture and issue insurance policies or contracts.)

A(n)____________ is the person or entity that is covered by an insurance policy. Insured Producer Agency Owner

Insured

___________ manufacture and sell insurance coverage in the form of policies or contracts of insurance. Producers Agencies Insurers Insureds

Insurers (manufacture and sell insurance policies through agencies to applicant/insureds.)

A FALSE statement in the application that can RENDER the contract void, if material to the acceptance of the risk, is known as a: Fraud Concealment Condition Misrepresentation

Misrepresentation (On the behalf of the insured gives the insurance company a right to terminate the policy.)

Which of the following statements is true? Q completes an application and submits it with premium to the insurer. Q made an offer Insurer X issues a policy with an outstanding premium requirement. X accepted an offer and the policy is in effect Insurer X rates the insured based on health reasons. X accepted an offer and the policy is in effect Q completes an application and submits it to the insurer. Q made an offer

Q completes an application and submits it with premium to the insurer. Q made an offer. (Offers must be accepted prior to contracts coming into being)

For the most part, the highest authority for insurance regulation is? The Interstate Commerce Commission (ICC) The Federal Trade Commission (FTC) The individual states The National Association of Insurance Commissioners (NAIC)

States (Authority to regulate insurance without interference from federal regulation)

Dividends issued by Stock insurers are paid to: Service providers Stockholders Agencies Policyholders

Stockholders (May receive taxable corporate dividends as a share of the stock insurer's profit..)

A statement that a person makes and guarantees to be TRUE is__________. Representation Fact Warranty Closely held belief

Warranty (absolute truth)

An insurer authorized to do business within this state is considered what type of insurer? Foreign Domestic Admitted Alien

Admitted (AUTHORIZED & can be either domestic, foreign, or alien domiciled)

Premium is considered the policy owner's: Credit Tender Fee Consideration

Consideration (Term for the premium paid by the insured is Consideration)

A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a? Conditional Contract Contract of Adhesion Unilateral Contract Aleatory Contract

Contract of Adhesion (Take it or Leave it)

_________ refers to the jurisdiction where an insurer was formed or incorporated. Authorized Domicile Admitted Approved

Domicile (jurisdiction state/country where an insurer was formed)

All of the following are essential elements of a legal contract, except: Representations Consideration Competent Parties Legal Purpose

Representations (Should be 4: Offer, Acceptance, Consideration, and Legal Purpose)

It is the _________ who issues a Certificate of Authority enabling an insurer to conduct insurance business within a particular state. Secretary of State State Congress State Senate State Insurance Commissioner

State Insurance Commissioner (Certificate of Authority issued by the State Insurance Commissioner, Superintendent, or Director)

An insurer issues a policy other than applied for requiring an additional premium of $100. When would an agreement come into being? When the applicant accepts delivery of the policy and pays the additional premium When the insurer places the policy into the mail to the producer for delivery to the applicant When the producer receives the policy from the home office When the producer calls the applicant over the phone and the applicant verbally agrees to the terms

When the applicant accepts delivery of the policy and pays the additional premium.

An applicant completes the application and submits it to the insurer along with a premium check. When is the applicant's offer considered accepted? When the insurer issues a policy Only after the policy owner completes any required medical exams When the application and premium check arrive at the insurer's home office Upon cashing the premium check

When the insurer issues a policy. (The applicant's offer to be insured is accepted when the insurer issues a policy.)

If a life insurance applicant's answers on the application indicate that he/she is in good health, when in fact the applicant has a disease that he/she is not aware of, the statement on the application is considered? Representation Warranty Fraudulent Concealment

Representation (Best of one's knowledge)

The contract type in which only one party is legally bound to its contractual obligations after a premium is paid is a Unilateral contract Conditional contract Personal contract Aleatory contract

Unilateral contract (Only the insurer is legally bound once the premium is paid by the insured. It is created by an offer than can only be accepted by performance.)

Which of the following best describes a Conditional Contract? A contract in which the exchange of values may be unequal A contract in which both parties must perform specified duties in order for the contract to remain enforceable A contract in which only one party is legally bound to contractual obligations A contract submitted on a take it or leave it basis

A contract in which both parties must perform specified duties in order for the contract to remain enforceable.

With health and life insurance a/an _________ is required at the time of the application. Ownership right Insurable interest Beneficiary status Indemnity interest

Insurable interest (must exist at the time of application, or policy effective date.)