L/A/H Insurance . C1.Introduction to Life Insurance & General Insurance Concepts . Questions
". . . a potential event or circumstance that could result in a financial loss to a person or organization. The loss is caused by an identifiable peril", best describes: A. Loss Exposure B. Lost Dollar C. Indemnification D. Peril
A
A "non-participating" company is also called a: A. Stock Company B. Mutual Company C. Fraternal D. Participating Company
A
A mutual insurer that becomes a stock company is said to have gone through what process? A. Demutualization B. Destabilization C. Conversion d. Reinsurance
A
A surplus lines insurance company is also referred to as a(n): A. Non-Admitted insurer B. Admitted company C. Authorized insurer D. Non-compliant company
A
All of the following would be considered fiduciary responsibilities of an agent, EXCEPT: A. Referring clients to an insurance advisor. B. Adhering to strict guidelines against commingling premiums. C. Completing continuing education requirements. D. Not giving answers which they are unsure of.
A
Insurance Rating Services analyze insurers based upon all of the following criteria EXCEPT: A. Personal Practices B. Expense Ratios C. Product Mix D. Insurer Reserve Adequacy
A
The most important aspect of the Law of Large Numbers is: A. It assists in creating accurate insurance rates B. It assists the marketing department in sales demographics C. It assists an insurer in creating sales plans for agents D. It spreads the risk over a large group of individuals
A
The most significant difference between a Stock and Mutual insurance company is: A. Ownership B. Paid-in surplus requirements C. Size of assets D. Location
A
Utilizing an analysis of lifetime earning potential minus taxes and other factors might describe: A. Human Life Value Approach B. Needs Approach C. Aggregate Value Approach D. Income Averaging Approach
A
When a policyowner cancels their policy prior to the renewal period, and is willing to pay a surrender fee in order to cancel coverage, they will receive: A. Pro-Rata refund of premium B. Short-Rata refund of premium C. The gross premium D. The earned premium
A
Which characteristic below cannot be used to determine the risk for a life or health insurance application? A. Marital Status B. Age C. Gender D. Occupation
A
Which characteristic below cannot be used to determine the risk for life or health insurance? A. Marital status B. Age C. Gender D. Occupation
A
Which department of an insurance company is responsible for determining the rates charged for an insurance policy? A. Actuarial B. Sales/Marketing C. Underwriting D. Claims
A
Which of the following methods of determining life insurance death benefit "need" is based, in major part, on the income potential of the applicant over their entire lifetime? A. Human Life Value Approach B. Needs Approach C. Aggregate Value Approach D. Income Averaging Approach
A
Which of the following terms best describes when an applicant for insurance has a greater likelihood of injury or illness, as compared to the general population? A. Standard Risk B. Loss Exposure C. Adverse Selection D. Indemnity
A
"Any unknown event, past or future, which may injure a person having an insurable interest, (or create a liability against) that may be insured against" best describes: A. An Insurable Party B. An Insurable Event C. An Uninsurable Event D. An Uninsurable Object
B
A "non-profit, social organization that often provides group life insurance to its' members" best describes a(n): A. Reciprocal B. Fraternal C. Reinsurance D. Debit Insurance
B
A MGA is defined as an individual who produces and underwrites gross direct written premium equal to or more than _% of the policyholder surplus as reported in the insurer's last annual statement A. 2 B. 5 C. 10 D. 15
B
An Agent Generally Represents which of the following? A. The Insured B. The Insurer C. A Service Representation D. The Department of Insurance
B
An insurer asks one of its agents to meet with and obtain additional information in order to complete the underwriting of a contract of insurance. This activity is not specifically listed in the agent's contract. What authority listed here best describes this authority? A. Actual Authority B. Implied Authority C. Apparent Authority D. Expressed Authority
B
An insurer that is chartered in the state of New Jersey and is authorized in Connecticut is referred to in a latter state as which of the following? A. Domestic Insurer B. Foreign Insurer C. Alien Insurer D. Nonadmitted Insurer
B
By definition, insurance is described as the _____ of risk. A. avoidance B. transfer C. retention D. reduction
B
How are expressed powered provided to an agent? A. By engaging in the same activities that his manager engages in B. By a written agency contract C. Directly from the state insurance department D. Directly from The National Association of Insurance Commissioners
B
Insurance Aids in reducing Uncertainty with regard to possible financial losses. Which of the following best identifies the uncertainty concerning loss or chance of loss? A. Hazard B. Risk C. Law of Large Numbers D. Retention
B
Reinsurance can be defined as the process whereby: A. Insurance risk is transferred to reinsurers, thus increasing the risk that claims will increase. B. Insurance risk is transferred to reinsurers, thus diversifying the risk amongst multiple companies. C. Insurance risk is transferred to foreign companies D. Insurance risk is renegotiated with regards to its premium or rate.
B
The two most common or primary types of risk are: A. Aggressive and Conservative B. Speculative (NI) and Pure (I) C. Standard and Preferred D. Hazard and Named Peril
B
What is the cause of loss? A. Hazard B. Peril C. Illness D. Accident
B
What provision below allows an insurer to charge an additional fee to offset expenses associated with paying premium other than annually? A. Reinstatement provision B. Payment of premium provision C. consideration clause D. Incontestability provision
B
Which choice below describes the statistics used by an insurer to help determine life insurance premiums? A. Morbidity table B. Mortality table C. Forecasting table D. Statistical table
B
Which of the following approaches used to determine the appropriate amount of life insurance involves an individual's future earning capacity? A. Needs Approach B. Human Life Value Approach C. Projecting Approach D. Financial Objectives Approach
B
"The price of insurance per each exposure unit" best describes the: A. Gross Premium B. Net Premium C. Rate D. Risk
C
An honest mistake when discussing an insurance contract benefit may also be known as a: A. Tart B. Taft C. Tort D. Tare
C
An insurance company that does not have a certificate of authority to conduct business in a state is called: A. A Foreign Company B. An Alien Company C. An Unauthorized Insurer D. A Reciprocal
C
An insurance company that is not permitted to conduct business in a state and does not have a certificate of authority to conduct business in a state is called a(n): A. Foreign company. B. Alien company. C. Unauthorized insurer. D. Reciprocal.
C
Fraternal offer various types of insurance programs for which of the following? A. For those in the residual market B. For those over age 65 C. For their members only D. For labor unions and their members
C
Having an adequate number of good or preferred risks to offset lower or poorer risks best describes: A. Insurer Profit Margins B. Gross Premiums C. Profitable Distribution of Exposure D. Profitable Distribution of Hazards
C
Having an adequate number of good or preferred risks to offset lower or poorer risks best describes: A. Insurer profit margins B. gross premiums C. profitable distribution of exposure D. Profitable distribution of hazards
C
Life insurance provides for the immediate __________________of an estate, upon the death of an insured. A. liquidation B. distribution C. creation D. substitution
C
One of the following statements is not a characteristic of an "Ideally Insurable" Risk? A. The loss must not be catastrophic to the insurer. B. Premiums charged must be reasonable. C. The Loss does not necessarily have to cause financial hardship D. The Loss must be definable
C
Someone who is careless or has an "I don't care" attitude would be considered a: A. standard risk. B. peril. C. morale hazard. D. preferred risk.
C
Someone who leaves his car idling while inside a convenience store would be said to be engaging in what type of hazard? A. Moral B. Legal C. Morale D. Physical
C
Somone who has a greater likelihood to file a claim, or one who aggressively looks to purchase insurance due to health concerns best describes a(n): A. Standard Risk B. Loss Exposure C. Adverse Selection D. Indemnity
C
The California Insurance Code defines the word "Insurance" to mean "a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from: A. An unknown event B. A Contingent Event C. A Contingent or Unknown Event D. Neither a contingent or unknown event
C
The Glenwood Insurance Company is headquartered in Lake Placid, NY. They are also authorized to conduct insurance business in several states other than New York. Which conducting insurance business in Ohio, this company would be considered a(n): A. Stock Company B. Alien Company C. Foreign Company D. Fraternal Company
C
The gross premium of a life insurance contract consists of: A. Mortality, expenses, commissions B. Mortality and interest C. Mortality, interest, commissions D. Mortality, interest, expenses
D
The maximum fine that could be levied against an individual who violates Federal Regulation 18 USC 1033/1034 is: A. $50,000 B. $100,000 C. $50,000 and up to 10 years in prison D. $50,000 and up to 15 years in prison
D
What provision allows an insurance company to charge a higher premium for administrative purposes?
Mode of Premium
An agnet represents her insurance company, while a broker legally represents: A. The Government B. Multiple Insurance Companies C. Themselves & Their Clients D. A broker does not legally represent anyone
C
Several Finanical burdens exist upon the death of an individual. Each of the following is a cost associated with death, EXCEPT: A. Burial Expenses B. Estate Taxes C. Indemnification Expenses D. Debt Obligations
C
The usual and customary business practices, that may not specifically be listed in an agent contract best describes what agent authority? A. Expressed B. Apparent C. Implied D. Actual
C
What is the most important aspect of the law of large numbers? A. It assists in creating sales plans for agents? B. It assists the marketing department in sales demographics C. It assists an insurer in creating accurate insurance rates. D. It spreads the risk over a large group of individuals
C
What table below helps to determine life insurance rates? A. Morbidity Tables B. Underwriting Tables C. Mortality Tables D. Los Benefit Tables
C
Which department of an insurance company is responsible for determining the acceptability of an applicant for insurance? A. Actuarial B. Sales/Marketing C. Underwriting D. Claims
C
Which of the following best defines the concept known as life insurance? A. The liquidation of funds B. The investment of funds C. The immediate creation of funds D. The Finance interest in another's life
C
Which of the following insurance concepts means that an insured or policyowner will only receive the actual amount of loss, even though the insurance contract allows for, or could pay, an even greater amount of benefit? A. Blanket Coverage B. Insurable Interest C. The Indemnity Principle D. The Risk Management Principle
C
Which of the following insurance concepts states an insured or policy owner will only receive the actual amount of loss, even though the insurance contract allows for, or could pay an even greater amount of benefit? A. Blanket Coverage B. Insurable Interest C. The Indemnity Principle D. The Risk Management Principle
C
Which statement below is correct with regard to the financial rating of an insurer? A. The financial rating of a company is important only to those who work within the insurance department. B. If requested, the financial rating of a company can be printed on a policy application. C. The financial rating of an insurer is not required to be placed on an insurance policy. D. Personal sales and marketing practices are included in the rating analysis.
C
"The price of insurance per each exposure unit" best describes the: A. Gross premium B. Net Premium C. Rate D. Risk
C
A Life insurance contract is defined as the immediate ________________ of an estate, upon the death of an insured. A. Liquidation B. Distribution C. Creation D. Substitution
C
A position of trust, particularly with regard to collected insurance premiums, best describes: A. Fiduciary Capacity B. Commingling of Premiums C. Honest of the Producer Agent D. Errors and Omissions
A
A potential event or circumstance that could result in a financial loss is caused by an identifiable peril", best describes: A. Loss exposure B. Loss Benefit C. Indemnification D. A Peril
A
An authorized company whose principal office is located in this state operates in this state as: A. Domestic Company B. Foreign Company C. An alien company D. A Nonadmitted Company
A
An office structure that generally involves just an individual producer best describes a: A. Personal producing general agency B. Managing General Agent C. Home Office D. Branch Office
A
Another name for a surplus lines insurance company is a(n): A. Non-admitted insurer B. Admitted Company C. Authorized Insurer D. Non-Compliant Company
A
An insurance company may be able to assess an additional fee or surcharge when a policyowner pays their premium in a mode other than annual. What provision below allows an insurer to charge this additional fee? A. Reinstatement provision B. Payment of Premium provision C. Consideration clause D. Incontestability provision
B
An insurance contact is an agreement between 2 parties. Which of the following are the parties involved in a life insurance contact? A. A policy owner and beneficiary B. Insurer and PolicyOwner C. Insured and Beneficiary D. Insurer and Beneficiary
B
An insurance owned by its policyholders best describes: A. A Stock company B. A Mutual Company C. An Alien Company D. A Reciprocal Company
B
Any unknown event, past or future, which may injure a person having an insurable interest, (or create a liability against) that may be insured against" best describes: A. An uninsurable event B. An insurable event C. An insurable characteristic D. An uninsurable object
B
A legal relationship between two parities when one of the parities acts on behalf of another is known as: A. Authority B. Agency C. Fiduciary Capacity D. Declaratory Judgement
B
All of the following statements regarding risk are TRUE except: A. Risk is transferred in an insurance transaction B. Speculative risk involves the chance for loss or gain C. Insurance provides a known benefit against an unknown event D. Risk is defined as a known event
B
An agent receives their expressed power through: A. Engaging in the same activities that their manager engages in B. A written agency contract C. The state insurance department D. The National Association of Insurance Commissioners
B
In order for one person to purchase life insurance on the life of another, a valid insurable interest must be present. When must insurable interest exist in life insurance? A. At the time of loss B. At the time of application C. When Death Occurs D. At the time of Underwriting
B
Which of the following risk management techniques is the most difficult to manage? A. Retention B. Avoidance C. Reduction D. Sharing
B
Which of the following risk management techniques listed below is the most difficult to completely manage? A. Retention B. Avoidance C. Reduce D. Share
B
Which of the following spreas the risk of loss from one person to a large number of persons through the pooling of collected premiums? A. Transference B. Insurance C. Pure Risk D. Risk Management
B
Which of the following types of authority is an extension of an agent's regular duties? A. Express B. Implied C. Apparent D. Warranted
B
Which statement below is incorrect with regard to reinsurance? A. The two primary forms of Reinsurance are Facultative and Automatic. B. The company that insures a transferred portion of a risk is known as the Primary Insurer. C. The company that transfers a portion of a risk to a reinsurer is known as the Primary Insurer. D. The process by which a reinsurer reinsures a portion of its risk is known as retrocession.
B
Which statement listed below regarding California Insurance Code 150 is incorrect? A. any person capable of making an insurance contract may be an insurer. B. As association, trust, LLC or partnership may not become an insurer C. A corporation may apply to become an insurer. D. Anyone other than an enemy alien may be listed as an insured party.
B
A Net Premium is comprised of: A. Mortality, Interest, and Expenses B. Interest & Expenses C. Mortality & Expenses D. Mortality & Interest
D
A non-profit social organization, that operates on a lodge system and provides group benefits to its members best describes a: A. Blue Cross/Blue Shield B. Franchise Policy C. Reciprocal D. Fraternal Organization
D
A reciprocal Company is managed by which of the following? A. A branch manager B. A company officer C. A Fraternal Organization D. An attorney in fact
D
All are covered under an errors and omissions policy except: A. An incorrect review of insurance contract benefits B. A review of group plan benefits C. Opinion or Advice D. Fraudulent misappropriation of collected premiums
D
All of the following are duties of an MGA except: A. Receives and remits collected insurance premiums B. Hire, Supervise, and possibly terminate agents C. Negotiate with, and accept or reject an applicant for insurance D. Replaces the agent's responsibility in acting on behalf of his principal.
D
All of the following influence the premiums charged for life insurance policies Except: A. Mortality B. Agent Commissions C. Investment Return D. Insurance Commissioner
D
An MGA has all of the following duties except: A. Negotiate with, and accept or reject an applicant for insurance B. Hire, supervise and possibly terminate agents C. Receive and remit collected insurance premiums D. Replace the agent's responsibility in acting on behalf of his principal
D
Debbie purchased an insurance policy and for the first 4 years of the contract, receives a nontaxable dividend check. In the fifth year she did not receive a dividend check. What type of company did Debbie purchase her policy from? A. Stock Company B. Non-Participation Company C. Fraternal Benefit Company D. Mutual Company
D
In California, there are 6 specifications that must be identified in every life or health insurance contract. Which of the following is not one of those 6 specifications? A. The risk being insured against B. The parties to the contract C. The relevant insurable interest D. The risk management technique being utilized
D
Insurable interest is required to be present at what time during an insurance transaction? A. At the time of policy approval B. At the time of loss C. At the time of policy development D. At the time of policy application
D
Methods of managing risk would include all the following except: A. Retention of risk B. Transfer of risk C. Avoidance of risk D. Replacement of risk
D
Mr. Hoffman paid his $3,400 annual life insurance premium on October 1, 2007. Three months later he suffers a heart attach and dies. What value, if any, would his beneficiary receive? A. The face amount of the contract B. Nothing, as he died of a heart attack C. The policy death benefit and 9 months of earned premium D. The policy death benefit and 9 months of unearned premium.
D
Mr. Steinway paid his $2,400 annual life insurance premium on June 1, 2007. Three months later he suffers a heart attack and dies. What value, if any, would his beneficiary receive? A. The face amount of the contract B. Nothing, as he died of a heart attack C. The policy death benefit and 9 months of earned premium D. The policy death benefit and 9 months of unearned premium
D
Regarding Insurance Risk, which statement below is false? A. Speculative risk involve the chance for loss or gain B. Risk is transferred in an insurance transaction C. Insurance provides a known benefit against an unknown event. D. Risk is defined as a known event.
D
Rick purchases an insurance policy and for the first 7 years of the contract, receives a nontaxable dividend check. In the eighth year he does not receive a dividend check. What type of company did Rick purchase his policy from? A. Stock Company B. Non-Participating Company C. Fraternal Benefit Company D. Mutual Company
D
The total premium is a combination of earned premium and: A. Net Premium B. Gross Premium C. Annual Premium D. Unearned Premium
D
What factors determine the gross premium of an insurance policy A. Mortality, Expenses, Commissions B. Mortality and Interest C. Mortality, Interest, Commissions D. Mortality, Interest, Expenses
D
When must insurable interest in a life insurance policy exist? A. At time of policy approval B. At time of loss C. At time of policy development D. At time of policy application
D
Which Statement Below is false? A. Insurance is defined as the transfer of risk. B. Insurance contracts are legal contracts C. Insurance attempts to pool risk. D. The applicant only needs to pay a premium in exchange for insurance coverage.
D
Which is not a specification that must be identified in every life or health insurance contract issued? A. The parties to a contract B. The risk being insured against C. The relevant insurable interest D. The risk management technique being utilized
D
Which of the following help to reduce or avoid adverse selection? A. Speculative risk B. Investment Income C. Human Life Values D. Sound Underwriting
D