LIFE AND HEALTH INSURANCE EXAM QUESTIONS WITH
COMPLETE SOLUTION
What year was the McCarren-Ferguson Act enacted?
1945
Which of the following requires insurers to disclose when an
applicant's consumer or credit history is being investigated?
1070 Fair Credit Reporting Act
A nonprofit incorporated society that does not have capital stock and
operates for the sole benefit of its members is known as:
fraternal benefit society
What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
treaty
Who elects the governing body of a mutual insurance company?
policy holders
At what point must a life insurance applicant be informed of their
rights that fall under the Fair Credit Reporting Act?
Upon completion of the application
What is the name of the law that requires insurers to disclose
information gathering practices and where the information was
obtained
Fair Credit Report
A group-owned insurance company that is formed to assume and
spread the liability risks of its members is known as a
risk retention group
Which of these describes a participating life insurance policy?
Policyowners are entitled to receive dividends
An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must
have on hand that will satisfy future obligations to its policyholders is
called
reserves
Q purchases a $500,000 life insurance policy and pays $900 in
premiums over the first six months. Q dies suddenly and the
, beneficiary is paid $500,000. This exchange of unequal values reflects
which of the following insurance contract features?
Aleatory
In an insurance contract the insurer is the only party who makes a
legally enforceable promise. What kind of contract is this?
Unilateral
Insurance contracts are known as ____ because certain future
conditions or acts must occur before any claims can be paid.
Conditional
Because certain future conditions or acts must
occur before any claims can be paid, insurance contracts
are known as conditional.
Stranger Originated Life Insurance has been found to be in violation
of which if the following contractual elements?
Legal Purpose
A policy of adhesion can only be modified by whom?
The insurance company.
(A policy of adhesion is best described as a policy which only the insurance
company can modify.)
At what point does an informal contract begin binding?
When one party makes an offer and the other party except that offer
When third-party ownership is involved applicants who also happen
to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
A life insurance arrangement which circumvents insurable interest
statutes is called
Investor-Originated Life Insurance
Statements made on an insurance application that are believed to be
true to the best of an applicants knowledge are called
Representations
Which of these require an offer, acceptance, and consideration?
Contract
The part of a life insurance policy guaranteed to be true is called a
Warranty
Warranties are statements that are considered literally true. A warranty that
is not literally true in every detail, even if made in error, is sufficient to
render a policy void.
COMPLETE SOLUTION
What year was the McCarren-Ferguson Act enacted?
1945
Which of the following requires insurers to disclose when an
applicant's consumer or credit history is being investigated?
1070 Fair Credit Reporting Act
A nonprofit incorporated society that does not have capital stock and
operates for the sole benefit of its members is known as:
fraternal benefit society
What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
treaty
Who elects the governing body of a mutual insurance company?
policy holders
At what point must a life insurance applicant be informed of their
rights that fall under the Fair Credit Reporting Act?
Upon completion of the application
What is the name of the law that requires insurers to disclose
information gathering practices and where the information was
obtained
Fair Credit Report
A group-owned insurance company that is formed to assume and
spread the liability risks of its members is known as a
risk retention group
Which of these describes a participating life insurance policy?
Policyowners are entitled to receive dividends
An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must
have on hand that will satisfy future obligations to its policyholders is
called
reserves
Q purchases a $500,000 life insurance policy and pays $900 in
premiums over the first six months. Q dies suddenly and the
, beneficiary is paid $500,000. This exchange of unequal values reflects
which of the following insurance contract features?
Aleatory
In an insurance contract the insurer is the only party who makes a
legally enforceable promise. What kind of contract is this?
Unilateral
Insurance contracts are known as ____ because certain future
conditions or acts must occur before any claims can be paid.
Conditional
Because certain future conditions or acts must
occur before any claims can be paid, insurance contracts
are known as conditional.
Stranger Originated Life Insurance has been found to be in violation
of which if the following contractual elements?
Legal Purpose
A policy of adhesion can only be modified by whom?
The insurance company.
(A policy of adhesion is best described as a policy which only the insurance
company can modify.)
At what point does an informal contract begin binding?
When one party makes an offer and the other party except that offer
When third-party ownership is involved applicants who also happen
to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
A life insurance arrangement which circumvents insurable interest
statutes is called
Investor-Originated Life Insurance
Statements made on an insurance application that are believed to be
true to the best of an applicants knowledge are called
Representations
Which of these require an offer, acceptance, and consideration?
Contract
The part of a life insurance policy guaranteed to be true is called a
Warranty
Warranties are statements that are considered literally true. A warranty that
is not literally true in every detail, even if made in error, is sufficient to
render a policy void.
