Exam simulation ethic 3

15. An independent agent may have contracts with which of the following? (Choose from the following options) 1. The Department of Insurance 2. The Commissioner 3. Brokers 4. More than one insurer

4. More than one insurer

11. Representations in insurance contracts qualify as (Choose from the following options) 1. Misrepresentations. 2. Facts. 3. Implied warranties. 4. Expressed warranties.

4. Expressed warranties. Right Answer 3. Implied warranties.

21. Which type of life insurance is usually written for small amounts and requires frequent premiums that are collected by the agent? (Choose from the following options) 1. Industrial life insurance 2. Credit life insurance 3. Group life insurance 4. Key executive life insurance

1. Industrial life insurance

22. Which of the following must be present in all Medicare supplement plans? (Choose from the following options) 1. Plan C coinsurance 2. Plan A 3. Foreign Travel provisions 4. Outpatient drugs

1. Plan C coinsurance Right Answer 2. Plan A

14. In order for an insurer to legally transact insurance, it must obtain which of the following? (Choose from the following options) 1. Authorization of Power 2. Certificate of Authority 3. Power of Authority 4. Director's Decree

2. Certificate of Authority

12. What term best describes the act of withholding material information that would be crucial to an underwriting decision? (Choose from the following options) 1. Breach of Warranty 2. Concealment 3. Withholding 4. Leading

2. Concealment

29. Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? (Choose from the following options) 1. False advertising 2. Rebating 3. Twisting 4. Switching

3. Twisting

7. According to the Code, how many separate requirements should an insurance policy have? (Choose from the following options) 1. 8 2. 10 3. 4 4. 6

4. 6

27. Which of the following is a characteristic of a purchasing group? (Choose from the following options) 1. A purchasing group must be domiciled in California. 2. It assumes and spreads the liability exposure of each member among all of the members. 3. It purchases liability insurance covering all members on a group basis. 4. It is considered a self-insured group.

4. It is considered a self-insured group. Right Insurance 3. It purchases liability insurance covering all members on a group basis.

13. On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of (Choose from the following options) 1. Rebating. 2. Misrepresentation. 3. Concealment. 4. Unfair claim practice.

4. Unfair claim practice. Right Answer 2. Misrepresentation.

4. Which of the following best describes the insurer's liability for losses arising from military service? (Choose from the following options) 1. The insurer's liability may be reduced or excluded. 2. The insurer is liable for all losses. 3. The insurer's liability is always excluded. 4. The insurer's liability is always reduced.

1. The insurer's liability may be reduced or excluded.

17. A contract which one party undertakes to indemnify another against loss is called (Choose from the following options) 1. Preparation. 2. Insurance. 3. Adverse Selection. 4. Risk.

2. Insurance.

5. What is reinsurance? (Choose from the following options) 1. An agreement between a ceding insurer and assuming insurer 2. An agreement between originating insurer and ceding insurer 3. An agreement between a domestic insurer and a foreign insurer 4. An agreement between an insurer and an insured

1. An agreement between a ceding insurer and assuming insurer

26. Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT (Choose from the following options) 1. An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him. 2. An agent offers the use of his lake house to person as an inducement to buy. 3. An agent offers to share his commission with a policyholder. 4. An agent offers tickets to a baseball game as an inducement to buy insurance.

1. An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him

1. The written instrument, in which a contract of insurance is set forth, is known as the (Choose from the following options) 1. Insuring clause. 2. Right of agency. 3. Policy. 4. Binding clause.

3. Policy.

24. The violation of a material warranty or other material provision of a policy allows (Choose from the following options) 1. Only the insured to rescind. 2. Only the insurer to rescind. 3. Both the insurer and the insured to rescind. 4. Neither the insurer nor the insured to rescind.

3. Both the insurer and the insured to rescind.

2. When transacting business in this state an insurer formed under the laws of another country is known as a/an (Choose from the following options) 1. Alien insurer. 2. Domestic insurer. 3. Foreign insurer. 4. Admitted insurer.

3. Foreign insurer. Right Answer 1. Alien insurer.

9. Paula has a history of severe asthma which caused her to be hospitalized in the past six months. If she discloses this on her application and is approved for her LTC policy, Paula's policy could (Choose from the following options) 1. Exclude asthma-related claims for up to six months. 2. Cancel her policy within two years if she suffers an asthma-related claim. 3. Permanently exclude asthma-related claims by name. 4. Exclude asthma-related claims for two years.

3. Permanently exclude asthma-related claims by name Right Answer 1. Exclude asthma-related claims for up to six months.

3. If found material for underwriting, a misrepresentation (Choose from the following options) 1. May be withdrawn. 2. Does not affect either of the parties. 3. Must have been in writing to affect a contract. 4. Can void a contract.

4. Can void a contract.

8. A life insurance policy can be delivered by all of the following means, EXCEPT (Choose from the following options) 1. First class mail with a delivery receipt. 2. Personal delivery by a trained employee of the insurer, with a delivery receipt. 3. Certified mail. 4. Priority mail.

4. Priority mail.

25. What method do insurers use to protect themselves against catastrophic losses? (Choose from the following options) 1. Indemnity 2. Pro rata liability 3. Risk-management 4. Reinsurance

4. Reinsurance

28. Which type of insurance includes the assumption of a contractual obligation to reimburse the insured against all or a portion of his fees, costs, and expenses related to or arising out of services performed by or under the supervision of an attorney who is an active member of the bar of any jurisdiction or jurisdictions of the United States? (Choose from the following options) 1. Legal insurance 2. Errors and Omission insurance 3. Professional Liability insurance 4. Contract insurance

1. Legal insurance

23. When an insurer cancels an automobile insurance policy for a reason other than nonpayment of premium, the insurer must meet all of the following requirements EXCEPT (Choose from the following options) 1. Explain the reason for policy cancellation. 2. Offer the insured to renew the policy at a different rate. 3. Send a 20-day notice. 4. Inform the policyowner about the automobile liability assigned risk plan.

2. Offer the insured to renew the policy at a different rate.

30. What is the purpose of California's State Compensation Insurance Fund (SCIF)? (Choose from the following options) 1. To provide insurance to people who would be financially unable to obtain it otherwise 2. To make workers compensation insurance available, especially to smaller companies with more limited payrolls 3. To provide income replacement for California residents who are temporarily or permanently disabled 4. To pay claims on behalf of insurers that are unable to pay claims due to insolvency

2. To make workers compensation insurance available, especially to smaller companies with more limited payrolls

20. If an insured intentionally failed to communicate information related to an implied warranty, which of the following may occur? (Choose from the following options) 1. The insurer may increase premiums at anniversary date. 2. The insurer will cancel the policy and retain the premiums paid. 3. The insurer may rescind the contract. 4. The insured will be fined.

3. The insurer may rescind the contract.

6. Joe lit a fire in his fireplace and left it unattended. He had failed to check to see if the flue was open, so the smoke entered the house and, in addition to discoloring the walls, ceiling, and drapes, Joe had to hire a company to remove the smoke odor. The total expense of cleaning and repainting was $6,000. How much would Joe's Standard Fire policy pay? (Choose from the following options) 1. Because the loss was caused by Joe's deductible, the policy would pay only 50% 2. Nothing 3. $6,000, less the deductible 4. The policy would pay for repainting and cleaning of the drapes, but not the removal of the smoke odor

2. Nothing

18. Which of the following is NOT one of the 3 factors set by state law for determining rates and premiums on automobile insurance policies? (Choose from the following options) 1. The number of years of driving experience the insured has had. 2. The type and model of vehicle. 3. The insured's driving safety record. 4. The number of miles he or she drives annually.

2. The type and model of vehicle.

16. The importance of a misrepresentation is determined by (Choose from the following options) 1. The cost of investigation. 2. Whether or not the policy is already issued. 3. The materiality of a given concealment. 4. The amount of money potentially lost.

3. The materiality of a given concealment.

10. Which of the following best describes a misrepresentation? (Choose from the following options) 1. A failure to disclose known facts. 2. An intentional omission of material information on the part of the insured. 3. A statement that is not guaranteed to be true. 4. A statement intended to distract, mislead, or deceive a party to a contract.

2. An intentional omission of material information on the part of the insured. Right Answer 4. A statement intended to distract, mislead, or deceive a party to a contract.

19. What is an injured party entitled to receive if an intentional concealment is discovered? (Choose from the following options) 1. $1,000 for any compensatory damages 2. Rescission of the policy 3. Nothing. Only intentional concealment is punishable. 4. No less than $500 and no more than $5,000 for compensatory damages

2. Rescission of the policy