AD Banker Chapter 1 Exam 2025
Questions and Answers
Which of the following is not a function of insurance?
A
To act as an investment vehicle for the insured
B
To exchange a small certain expense for a large uncertain loss
C
To transfer risk from the insured to the insurer
D
To protect against uncertainty and reduce anxiety - ANSWER✔✔-A) To act as an
investment vehicle for the insured
An insurer with capital that is divided into shares, and is owned by shareholders, is
considered a:
,A
Reciprocal insurer
B
Stock insurance company
C
Fraternal Benefit Society
D
Mutual insurance company - ANSWER✔✔-B) Stock insurance Company
Policyowner P has just finished painting the interior walls in their home, and stores
leftover paint thinner in the basement near the furnace. What kind of hazard does the
stored paint thinner present?
A
Physical
B
Moral
C
Peril
, D
Morale - ANSWER✔✔-A) Physical
Which of the following is least likely to be a factor when determining the eligibility of a
person for property insurance?
A
Existence of any hazards, such as a nearby gas station exposure
B
The nature of the risk, such as the type of building and the number of families living in
the building
C
Whether the premium will be paid in full or billed to the insured
D
The claims history showing when prior claims occurred and how much was paid to
settle the claim - ANSWER✔✔-C) Whether the premium will be paid in full or billed to
the insured
P is an agent for ABC Insurer, which has just issued an insurance policy to M. In this
transaction, who is known as the principal?
Questions and Answers
Which of the following is not a function of insurance?
A
To act as an investment vehicle for the insured
B
To exchange a small certain expense for a large uncertain loss
C
To transfer risk from the insured to the insurer
D
To protect against uncertainty and reduce anxiety - ANSWER✔✔-A) To act as an
investment vehicle for the insured
An insurer with capital that is divided into shares, and is owned by shareholders, is
considered a:
,A
Reciprocal insurer
B
Stock insurance company
C
Fraternal Benefit Society
D
Mutual insurance company - ANSWER✔✔-B) Stock insurance Company
Policyowner P has just finished painting the interior walls in their home, and stores
leftover paint thinner in the basement near the furnace. What kind of hazard does the
stored paint thinner present?
A
Physical
B
Moral
C
Peril
, D
Morale - ANSWER✔✔-A) Physical
Which of the following is least likely to be a factor when determining the eligibility of a
person for property insurance?
A
Existence of any hazards, such as a nearby gas station exposure
B
The nature of the risk, such as the type of building and the number of families living in
the building
C
Whether the premium will be paid in full or billed to the insured
D
The claims history showing when prior claims occurred and how much was paid to
settle the claim - ANSWER✔✔-C) Whether the premium will be paid in full or billed to
the insured
P is an agent for ABC Insurer, which has just issued an insurance policy to M. In this
transaction, who is known as the principal?
