Fundamentals of Insurance (MB) Exam
Questions With Correct Answers
What are the 5 functions of insurance? - CORRECT ANSWER✔✔-1.
| | | | | | | | | |
Spread of Risk | |
2. Basis of Credit System
| | | |
3. Eliminates Worry - Encourages Entrepreneurship
| | | | |
4. Loss Prevention and Loss Reduction
| | | | |
5. Source of Employment and Investment Capital
| | | | | |
There are 5 important points when it comes to the definition of
| | | | | | | | | | | |
insurance. What are they? - CORRECT ANSWER✔✔-1. Provides a means
| | | | | | | | | |
of shifting one's financial responsibility for a loss to another party.
| | | | | | | | | |
2. Payment will be made only in the event of a certain risk or peril.
| | | | | | | | | | | | | |
3. The amount of payment is restricted to the amount required to
| | | | | | | | | | | |
indemnify the insured. | |
4. Insurance cover losses that are accidental and future.
| | | | | | | |
5. The indemnity provided can be in the form of money or other thing of
| | | | | | | | | | | | | |
value.
|
Define the term "risk" - CORRECT ANSWER✔✔-The object of insurance
| | | | | | | | |
,Define the term "peril" - CORRECT ANSWER✔✔-The cause of loss
| | | | | | | | |
Define the term "indemnity" - CORRECT ANSWER✔✔-A form of
| | | | | | | | |
compensation from insurance. | |
What is the proper application of the Principle of Indemnity? - CORRECT
| | | | | | | | | | |
|ANSWER✔✔-Ensuring that people receive the actual amount of their | | | | | | | | |
loss (as it was moments prior to loss).
| | | | | | |
No more, no less
| | |
Insurance in Canada is distributed by 2 distinct types of organizations.
| | | | | | | | | | |
What are they? - CORRECT ANSWER✔✔-1. Private Insurers
| | | | | | |
2. Government Insurers
| |
There are two types of private insurers. What are they? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-1. Stock Company | |
2. Mutual Company
| |
Stock Company vs. Mutual Company - CORRECT ANSWER✔✔-Stock
| | | | | | | |
companies are owned by the shareholders whose main goal is to make a
| | | | | | | | | | | |
profit; Mutual companies are owned by the policy owners who receive
| | | | | | | | | | | |
, all dividends/profits shared by the company at the end of the year. Their
| | | | | | | | | | | |
main goal is to provide insurance at as low cost as possible.
| | | | | | | | | | | |
What is another name for Property and Casualty Insurance? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-P&C is also known as General Insurance | | | | | |
What 3 types of insurance are included in General Insurance? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-1. Auto | |
2. Property
|
3. Liability
|
How is insurance distributed? - CORRECT ANSWER✔✔-1. Direct Writing
| | | | | | | | |
System
2. Independent Brokerage System
| | |
3. Agency System
| |
How does direct writing work? - CORRECT ANSWER✔✔-They are
| | | | | | | | |
employees of the insurer and are limited to selling ONLY their products.
| | | | | | | | | | |
How does an independent brokerage work? - CORRECT ANSWER✔✔-
| | | | | | | |
They are employees of the brokerage NOT the insurer. They normally
| | | | | | | | | | |
chose to represent multiple insurers.
| | | |
Questions With Correct Answers
What are the 5 functions of insurance? - CORRECT ANSWER✔✔-1.
| | | | | | | | | |
Spread of Risk | |
2. Basis of Credit System
| | | |
3. Eliminates Worry - Encourages Entrepreneurship
| | | | |
4. Loss Prevention and Loss Reduction
| | | | |
5. Source of Employment and Investment Capital
| | | | | |
There are 5 important points when it comes to the definition of
| | | | | | | | | | | |
insurance. What are they? - CORRECT ANSWER✔✔-1. Provides a means
| | | | | | | | | |
of shifting one's financial responsibility for a loss to another party.
| | | | | | | | | |
2. Payment will be made only in the event of a certain risk or peril.
| | | | | | | | | | | | | |
3. The amount of payment is restricted to the amount required to
| | | | | | | | | | | |
indemnify the insured. | |
4. Insurance cover losses that are accidental and future.
| | | | | | | |
5. The indemnity provided can be in the form of money or other thing of
| | | | | | | | | | | | | |
value.
|
Define the term "risk" - CORRECT ANSWER✔✔-The object of insurance
| | | | | | | | |
,Define the term "peril" - CORRECT ANSWER✔✔-The cause of loss
| | | | | | | | |
Define the term "indemnity" - CORRECT ANSWER✔✔-A form of
| | | | | | | | |
compensation from insurance. | |
What is the proper application of the Principle of Indemnity? - CORRECT
| | | | | | | | | | |
|ANSWER✔✔-Ensuring that people receive the actual amount of their | | | | | | | | |
loss (as it was moments prior to loss).
| | | | | | |
No more, no less
| | |
Insurance in Canada is distributed by 2 distinct types of organizations.
| | | | | | | | | | |
What are they? - CORRECT ANSWER✔✔-1. Private Insurers
| | | | | | |
2. Government Insurers
| |
There are two types of private insurers. What are they? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-1. Stock Company | |
2. Mutual Company
| |
Stock Company vs. Mutual Company - CORRECT ANSWER✔✔-Stock
| | | | | | | |
companies are owned by the shareholders whose main goal is to make a
| | | | | | | | | | | |
profit; Mutual companies are owned by the policy owners who receive
| | | | | | | | | | | |
, all dividends/profits shared by the company at the end of the year. Their
| | | | | | | | | | | |
main goal is to provide insurance at as low cost as possible.
| | | | | | | | | | | |
What is another name for Property and Casualty Insurance? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-P&C is also known as General Insurance | | | | | |
What 3 types of insurance are included in General Insurance? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-1. Auto | |
2. Property
|
3. Liability
|
How is insurance distributed? - CORRECT ANSWER✔✔-1. Direct Writing
| | | | | | | | |
System
2. Independent Brokerage System
| | |
3. Agency System
| |
How does direct writing work? - CORRECT ANSWER✔✔-They are
| | | | | | | | |
employees of the insurer and are limited to selling ONLY their products.
| | | | | | | | | | |
How does an independent brokerage work? - CORRECT ANSWER✔✔-
| | | | | | | |
They are employees of the brokerage NOT the insurer. They normally
| | | | | | | | | | |
chose to represent multiple insurers.
| | | |
