Webce General Insurance & Life Insurance Exam
Questions and Answers (Verified Answers)
1. Buying life or health insurance is an example of which risk
management technique?
risk avoidance
risk reduction
risk retention
risk transfer
: risk transfer
2. What is the mathematical concept of probability that helps insurers
estimate the statistical likelihood of mortality or morbidity losses at any
given age?
law of large numbers
underwriting principle
law of probability
actuarial principle
: law of large numbers
,3. A person who refuses to engage is risky activities like rock climbing for
fear of injury or death is demonstrating which risk management technique?
risk avoidance
risk reduction
risk retention
risk sharing
: risk avoidance
4. Which of the following is an insurable risk?
the possibility of losing money in stock investments
the possibility of losing money gambling in Las Vegas
the possibility of becoming disabled and unable to earn an income
the possibility of one's home value decreasing due to a drop in market
prices-
: the possibility of becoming disabled and unable to earn an income
5. All the following statements regarding reinsurance are correct EXCEPT:
Reinsurance is a risk-sharing process used by insurance companies.
Claims are paid to the policyowner separately by each insurer participating
,in the reinsurance agreement.
The insurer accepting some of the risk being transferred from another
insurer is known as the reinsuring company.
The insurer seeking to transfer some of its risk to another insurer is known
as the ceding company.
: Claims are paid to the policyowner separately by each insurer
participating in the reinsurance agreement.
, 6. All of the following are characteristics of a stock insurance company
EX- CEPT:
They are governed by a board of
directors. They may issue dividends.
They have minimum financial capital requirements that must be met
before they can conduct business.
They are owned by policyowners.
: They are owned by policyowners.
7. All of the following statements regarding the career agency
distribution system are correct EXCEPT:
The managerial form of career agency system uses company employees
as the agency managers.
There are two types, the general agency system and the managerial
system. It uses agents who primarily if not exclusively represent one
insurer.
Personal producing general agents (PPGAs) are commonly hired to manage
career agencies.
: Personal producing general agents (PPGAs) are commonly hired to
manage career agencies.
8. The federal Risk Retention Act of 1986 contains guidelines for which of
the following entities?
Questions and Answers (Verified Answers)
1. Buying life or health insurance is an example of which risk
management technique?
risk avoidance
risk reduction
risk retention
risk transfer
: risk transfer
2. What is the mathematical concept of probability that helps insurers
estimate the statistical likelihood of mortality or morbidity losses at any
given age?
law of large numbers
underwriting principle
law of probability
actuarial principle
: law of large numbers
,3. A person who refuses to engage is risky activities like rock climbing for
fear of injury or death is demonstrating which risk management technique?
risk avoidance
risk reduction
risk retention
risk sharing
: risk avoidance
4. Which of the following is an insurable risk?
the possibility of losing money in stock investments
the possibility of losing money gambling in Las Vegas
the possibility of becoming disabled and unable to earn an income
the possibility of one's home value decreasing due to a drop in market
prices-
: the possibility of becoming disabled and unable to earn an income
5. All the following statements regarding reinsurance are correct EXCEPT:
Reinsurance is a risk-sharing process used by insurance companies.
Claims are paid to the policyowner separately by each insurer participating
,in the reinsurance agreement.
The insurer accepting some of the risk being transferred from another
insurer is known as the reinsuring company.
The insurer seeking to transfer some of its risk to another insurer is known
as the ceding company.
: Claims are paid to the policyowner separately by each insurer
participating in the reinsurance agreement.
, 6. All of the following are characteristics of a stock insurance company
EX- CEPT:
They are governed by a board of
directors. They may issue dividends.
They have minimum financial capital requirements that must be met
before they can conduct business.
They are owned by policyowners.
: They are owned by policyowners.
7. All of the following statements regarding the career agency
distribution system are correct EXCEPT:
The managerial form of career agency system uses company employees
as the agency managers.
There are two types, the general agency system and the managerial
system. It uses agents who primarily if not exclusively represent one
insurer.
Personal producing general agents (PPGAs) are commonly hired to manage
career agencies.
: Personal producing general agents (PPGAs) are commonly hired to
manage career agencies.
8. The federal Risk Retention Act of 1986 contains guidelines for which of
the following entities?
