Life insurance exam
When risks with higher probability of laws are seeking insurance more often than other risks this is often known as what?
Adverse selection
According to the law of agency a principal is represented by whom?
Agent or producer
What type of insurer is formed under the laws of another country?
Alien
What is a warranty in an insurance contract?
An absolute true statement upon which the validity of the insurance contract is based
If an insurer meets the states financial requirements and is approved to transact business in the state it is considered what type of insurer?
Authorized or admitted
What document is required for an insurance company to transact insurance?
Certificate of authority
When a change needs to be made on the application for insurance which is the best method for collecting the information?
Complete a new application or ask the applicant to initial the correction on the original application
What are the three types of agent authority?
Express, implied and apparent
The requirement that agents must account for and properly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
An insurance company is domiciled in California and transact insurance in Nevada what is the insurers classification in Nevada?
Foreign
An insurance company that is formed under the laws of another state is known as what type of insurer?
Foreign
Conditions that increase the chance of a loss are known as what?
Hazards
What type of report provides information about the applicants hobbies habits and financial status?
Inspection report
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
What do individuals use to transfer their risk of loss to a larger group?
Insurance
Whom does an insurance agent represent?
Insurance company
In the agent/insure a relationship who is considered the principal?
Insurer
When agents act within the scope of their contract their actions will be assumed to be the acts of whom?
Insurer
What entitles make up the medical information bureau?
Insurers
Insurance is a contract that protects the insured from what?
Loss
The reduction decrease or disappearance of value of the person or property insured in a policy is known as what?
Loss
What are the five characteristics of an ideally insurable risk?
Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.
An insurance policy paid a non-taxable dividend to the insured one year and nothing the next from what type of insurer did the insured purchase the policy?
Mutual
The type of insurance company organize to return any surplus money to its policyholders is known as what?
Mutual company
What is the term for the causes of loss insured against an insurance policy?
Peril
What are the three types of hazards?
Physical, Moral, Morale
What type of risk is insurable?
Pure
A situation in which a person can only experience a loss and no gain represents what type of risk?
Pure risk
What are the strategies used by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion
If an agent fails to obtain the applicant signature on the insurance application what must the insurer do?
Send the application back to the applicant for signature
Wagering on a sporting event is known as what type of risk?
Speculative
The insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
If an applicant does not receive his or her insurance policy who would be held responsible?
The agent
Who's responsibility is it to determine that all the questions on an insurance application are answered?
The agents
For the purpose of insurance what is risk?
Uncertainty of loss
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
In insurance when is the offer usually made on a contract?
When the insurance application is submitted
In forming an insurance contract when does an acceptance usually occur?
When the insurer approves a prepaid application
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
What are the four elements of an insurance contract?
agreement, consideration, competent parties, legal purpose
Insurers are classified according to their domicile what are the three types of insurers?
domestic, foreign, alien
An application conceals relevant health information on the application the applicant presents what type of hazard?
moral
A person who does not lock the doors to his or her house shows an indifferent attitude this person presents what type of hazard?
morale
Who owns stock companies?
stockholders