HEALTH ONLY_Chapter 1- Principles of Insurance and General Insurance

What insurance concept is associated with the names Weiss and Fitch? A. Guides describing company financial integrity B. Policy dividends C. Types of mutual companies D. Index used by stock companies

A. Guides describing company financial integrity

Which of the following is NOT true regarding a Certificate of Authority? A. It is issued to group insurance participants B. It may be necessary for transacting business in a specific state C. It is equivalent to an insurance license D. It is issued by the state department of insurance

A. It is issued to group insurance participants

When transacting business in this state an insurer formed under the laws of another country is known as a/an A. Domestic insurer B. Foreign insurer C. Admitted insurer D. Alien insurer

D. Alien insurer

When an individual purchases insurance, what risk management technique is he or she practicing? A. Sharing B. Retention C. Transfer D. Avoidance

C. Transfer

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT A. Consideration B. Legal purpose C. Offer and acceptance D. Conditions

D. Conditions

Which of the following types of agent authority is also called "perceived authority"? A. Implied B. Fiduciary C. Apparent D. Express

C. Apparent

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

B. Morale

All of the following are examples of risk retention EXCEPT A. Self-insurance B. Premiums C. Deductibles D. Copayments

B. Premiums

Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? A. SEC B. AM Best C. NAIC D. Consumer's guide

B. AM Best

Which of the following entities is not an insurer but an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? A. Reciprocal association B. Fraternal benefit society C. Mutual company D. Stock company

B. Fraternal benefit society

When would a misrepresentation on the insurance application be considered fraud? A. Never: statements by the applicant are only representations B. When the application is incomplete C. Any misrepresentation is considered fraud D. If it is intentional and material

D. If it is intentional and material

An insurance contract must contain all of the following to be considered legally binding EXCEPT A. Offer and acceptance B. Consideration C. Competent parties D. Beneficiary's consent

D. Beneficiary's consent

An insured purchases an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not a taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A. Reciprocal B. Nonprofit service organization C. Stock D. Mutual

D. Mutual

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 A. The loss produced by the risk must be definite B. The loss may be intentional C. The loss must not be catastrophic D. There must be a sufficient number of homogenous exposure units to make losses reasonably predictable

B. The loss may be intentional

The authority granted to an agent through the agent's contract is referred to as A. Express authority B. Apparent authority C. Implied authority D. Absolute authority

A. Express authority

Which of the following is NOT a goal of risk retention? A. To minimize the insured's level of liability in the event of loss B. To reduce expenses and improve cash flow C. To increase control of claim reserving and claims settlements D. To fund losses that cannot be insured

A. To minimize the insured's level of liability in the event of loss

In this state, insurers must pay a claim within how many days of receiving proof of loss? A. 10 days B. 15 days C. 30 days D. 90 days

C. 30 days

The Commissioner issues an order without holding a hearing. The person aggrieved by this order demands a hearing shortly after receiving the order. The hearing must be held within a maximum of how many days? A. 10 B. 30 C. 60 D. 90

C. 60

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of A. Fraud B. Breach of warranty C. Concealment D. Waiver

C. Concealment

Which of the following is considered to be a morale hazard? A. Working as a firefighter B. Engaging in illegal activities C. Driving recklessly D. Smoking

C. Driving recklessly

The risk of loss may be classified as A. Pure risk and speculative risk B. Certain risk and uncertain risk C. Named risk and un-named risk D. High risk and low risk

A. Pure risk and speculative risk

Which of the following best describes an insurance company that has been formed under the laws of this state? A. Sovereign B. Alien C. Foreign D. Domestic

D. Domestic