Alabama Life & Health Insurance Exam Test Bank 1 Newest
Actual Exam With Complete Questions And Correct Detailed
Answers (Verified Answers) |Already Graded A+
Which of the following would be considered a speculative risk? -
ANSWERS--The possibility the painting you bought might be a long-
lost masterpiece
A speculative risk is one in which there is a chance for either loss or
gain. Example: Gambling, Casino's, Lottery, etc. All of the other
choices describe pure risk, where there is no chance of gain, only a
chance of loss exists.
Which is the proper term for a company owned by its policy owners?
- ANSWERS--A mutual insurance company
A producer who is acting as an agent is representing: - ANSWERS--
Always the insurer
All of the following are elements of a contract, except: - ANSWERS--
Authority
All enforceable contracts must include these characteristics: offer
and acceptance (agreement), considerations, competent parties, and
legal purpose. Authority is not considered one of the elements of a
legal contract.
,Each of the following would be an element in the definition of fraud,
except: - ANSWERS--An individual warrants a fact stated on the
application
A warranted fact is one guaranteed to be true. Although no
statement on an application is regarded as warranty, no fraud is
involved if a statement is guaranteed to be true.
Examples of Fraud - ANSWERS--Intentional material
misrepresentation with the intent of causing injury to another party
Withholding of known material facts
A false statement on the application that is material to the
acceptance of the risk
A company that is licensed to sell insurance in a particular state is: -
ANSWERS--An authorized Company
In order to be valid, a contract must be between individuals
considered legally able to enter into an agreement. This principle is
known as: - ANSWERS--Competent parties
An insurance contract is an aleatory contract. This means: -
ANSWERS--Equal value is not given by both parties to the contract
Aleatory: contract of unequal values exchanged
,The ____________ market is a private source of coverage of last
resort for individuals or businesses that have been rejected by
voluntary market insurers. - ANSWERS--Residual
To address adverse selection what can an insurer legally do? -
ANSWERS--Establish and enforce sound underwriting practices
Underwriting helps to protect the insurer against adverse selection
and accepting risks that are more likely than average to suffer losses.
A contract that is drafted by an insurer and receives no input or
alteration from the insured, is considered a(n): - ANSWERS--Contract
of Adhesion
_________ refers to the jurisdiction where an insurer was formed or
incorporated. - ANSWERS--Domicile: Domicile refers to the
jurisdiction either state or country where an insurer was formed or
incorporated.
_____________ insurance allows for insurance coverage to be
obtained when not available from admitted carriers. - ANSWERS--
Surplus Lines
Insurance can be obtained through surplus lines brokers (producers)
from non-admitted insurers.
, To make insurance more affordable and protect the insurance
company from paying out too much in claims, insurers will: -
ANSWERS--Reinsure the risk
Reinsurance is what makes insurance affordable. Reinsurance
companies are insurance companies that accept all or a portion of
the financial risk of loss from the insurance company.
The field underwriter is the _________ and is not a determiner of
insurability. - ANSWERS--Producer
The producer is in the field soliciting applications for insurance and in
effect is another pair of eyes and ears for the insurer in helping to
issue policies to insurable prospects.
Third-party ownership refers to: - ANSWERS--A situation where the
policyowner is someone other than the insured
Which statement best describes the term reserve? - ANSWERS--That
amount that, when increased by future premiums on outstanding
policies, and interest on those premiums will enable the company to
meet future death claims
The applicant, if other than the proposed insured, must have: -
ANSWERS--An insurable interest in the life of the insured
Actual Exam With Complete Questions And Correct Detailed
Answers (Verified Answers) |Already Graded A+
Which of the following would be considered a speculative risk? -
ANSWERS--The possibility the painting you bought might be a long-
lost masterpiece
A speculative risk is one in which there is a chance for either loss or
gain. Example: Gambling, Casino's, Lottery, etc. All of the other
choices describe pure risk, where there is no chance of gain, only a
chance of loss exists.
Which is the proper term for a company owned by its policy owners?
- ANSWERS--A mutual insurance company
A producer who is acting as an agent is representing: - ANSWERS--
Always the insurer
All of the following are elements of a contract, except: - ANSWERS--
Authority
All enforceable contracts must include these characteristics: offer
and acceptance (agreement), considerations, competent parties, and
legal purpose. Authority is not considered one of the elements of a
legal contract.
,Each of the following would be an element in the definition of fraud,
except: - ANSWERS--An individual warrants a fact stated on the
application
A warranted fact is one guaranteed to be true. Although no
statement on an application is regarded as warranty, no fraud is
involved if a statement is guaranteed to be true.
Examples of Fraud - ANSWERS--Intentional material
misrepresentation with the intent of causing injury to another party
Withholding of known material facts
A false statement on the application that is material to the
acceptance of the risk
A company that is licensed to sell insurance in a particular state is: -
ANSWERS--An authorized Company
In order to be valid, a contract must be between individuals
considered legally able to enter into an agreement. This principle is
known as: - ANSWERS--Competent parties
An insurance contract is an aleatory contract. This means: -
ANSWERS--Equal value is not given by both parties to the contract
Aleatory: contract of unequal values exchanged
,The ____________ market is a private source of coverage of last
resort for individuals or businesses that have been rejected by
voluntary market insurers. - ANSWERS--Residual
To address adverse selection what can an insurer legally do? -
ANSWERS--Establish and enforce sound underwriting practices
Underwriting helps to protect the insurer against adverse selection
and accepting risks that are more likely than average to suffer losses.
A contract that is drafted by an insurer and receives no input or
alteration from the insured, is considered a(n): - ANSWERS--Contract
of Adhesion
_________ refers to the jurisdiction where an insurer was formed or
incorporated. - ANSWERS--Domicile: Domicile refers to the
jurisdiction either state or country where an insurer was formed or
incorporated.
_____________ insurance allows for insurance coverage to be
obtained when not available from admitted carriers. - ANSWERS--
Surplus Lines
Insurance can be obtained through surplus lines brokers (producers)
from non-admitted insurers.
, To make insurance more affordable and protect the insurance
company from paying out too much in claims, insurers will: -
ANSWERS--Reinsure the risk
Reinsurance is what makes insurance affordable. Reinsurance
companies are insurance companies that accept all or a portion of
the financial risk of loss from the insurance company.
The field underwriter is the _________ and is not a determiner of
insurability. - ANSWERS--Producer
The producer is in the field soliciting applications for insurance and in
effect is another pair of eyes and ears for the insurer in helping to
issue policies to insurable prospects.
Third-party ownership refers to: - ANSWERS--A situation where the
policyowner is someone other than the insured
Which statement best describes the term reserve? - ANSWERS--That
amount that, when increased by future premiums on outstanding
policies, and interest on those premiums will enable the company to
meet future death claims
The applicant, if other than the proposed insured, must have: -
ANSWERS--An insurable interest in the life of the insured
