Fundamentals of Life Insurance and Annuities Exam
Questions With Accurate Answers.
Insurable interest - accurate answers-An insurable interest must exist at the
time the policy is issued, and some relationships are automatically presumed
to qualify, such as spouses, parents, children, and certain business
relationships.
Pure risk - accurate answers-Events in which a person has both the chance of
winning or losing.
Speculative risk - accurate answers-Involves the chance of gain or loss and is
not insurable.
Morale hazard - accurate answers-A person who shows an indifferent attitude
towards an insurance company, being careless or irresponsible because he
knows his loss will be covered by insurance.
Implied warranty - accurate answers-In the forming of an insurance contract,
it refers to the reliance of the insurer on the statements in the application and
the insured's reliance on the insurer to pay valid claims.
Retention - accurate answers-A risk management technique where insurance
is a transfer of the risk of financial loss from a covered peril from the insured
to the insurance company.
Deductibles - accurate answers-An example of risk retention that is not a
planned assumption of risk.
,Self-insurance - accurate answers-Installing deadbolt locks on the doors of a
home is an example of this method of handling risk.
Risk reduction - accurate answers-Steps taken to prevent losses from
occurring.
Claim reserving and claims settlements - accurate answers-Not a goal of risk
retention; retention usually results from desires to reduce expenses, improve
cash flow, and fund losses that cannot be insured.
Risk - accurate answers-Defined as the certainty of loss, or the chance of loss
occurring, which is the basic reason for buying insurance.
Race - accurate answers-A factor not considered by an underwriter when
determining premium rates for an individual seeking insurance.
Legal hazard - accurate answers-The growing tendency of individuals to file
lawsuits and claim tremendous amounts of alleged damage.
Insurable event - accurate answers-According to the California Insurance
Code, it refers to any event that may damage a person having an insurable
interest or create a liability against him/her.
Misrepresentation violation - accurate answers-A person caught violating
provisions regarding misrepresentation could be subject to a fine up to
$25,000.
Implied warranty in insurance contract - accurate answers-A warranty that is
not explicitly stated but is assumed to be part of the contract.
, Warranty - accurate answers-A statement considered to be guaranteed to be
true and becomes part of the contract.
Implied Warranties - accurate answers-Representations in insurance
contracts qualify as implied warranties.
Insurance Policy Requirements - accurate answers-An insurance policy has 6
requirements: it identifies the parties to the contract; the life or property of
the insured; insurable interest; the risks insured against; the period during
which the insurance is to continue; and the amount of premium.
Concealment - accurate answers-The failure to disclose known facts.
Materiality - accurate answers-In determining how material a piece of
information is to each party of a contract, the value is not determined by the
event itself, but solely by the influence this information would have in forming
an estimate of the advantages or the disadvantages of the contract.
Unilateral Contract - accurate answers-If only one party to an insurance
contract has made a legally enforceable promise.
Express Warranty - accurate answers-Every expressed warranty made at or
before the execution of a policy must be contained in the policy itself, or in
another instrument signed by the insured and referred to in the policy.
Material Misrepresentation - accurate answers-A statement by the applicant
that, upon discovery, would affect the underwriting decision of the insurance
company.
Questions With Accurate Answers.
Insurable interest - accurate answers-An insurable interest must exist at the
time the policy is issued, and some relationships are automatically presumed
to qualify, such as spouses, parents, children, and certain business
relationships.
Pure risk - accurate answers-Events in which a person has both the chance of
winning or losing.
Speculative risk - accurate answers-Involves the chance of gain or loss and is
not insurable.
Morale hazard - accurate answers-A person who shows an indifferent attitude
towards an insurance company, being careless or irresponsible because he
knows his loss will be covered by insurance.
Implied warranty - accurate answers-In the forming of an insurance contract,
it refers to the reliance of the insurer on the statements in the application and
the insured's reliance on the insurer to pay valid claims.
Retention - accurate answers-A risk management technique where insurance
is a transfer of the risk of financial loss from a covered peril from the insured
to the insurance company.
Deductibles - accurate answers-An example of risk retention that is not a
planned assumption of risk.
,Self-insurance - accurate answers-Installing deadbolt locks on the doors of a
home is an example of this method of handling risk.
Risk reduction - accurate answers-Steps taken to prevent losses from
occurring.
Claim reserving and claims settlements - accurate answers-Not a goal of risk
retention; retention usually results from desires to reduce expenses, improve
cash flow, and fund losses that cannot be insured.
Risk - accurate answers-Defined as the certainty of loss, or the chance of loss
occurring, which is the basic reason for buying insurance.
Race - accurate answers-A factor not considered by an underwriter when
determining premium rates for an individual seeking insurance.
Legal hazard - accurate answers-The growing tendency of individuals to file
lawsuits and claim tremendous amounts of alleged damage.
Insurable event - accurate answers-According to the California Insurance
Code, it refers to any event that may damage a person having an insurable
interest or create a liability against him/her.
Misrepresentation violation - accurate answers-A person caught violating
provisions regarding misrepresentation could be subject to a fine up to
$25,000.
Implied warranty in insurance contract - accurate answers-A warranty that is
not explicitly stated but is assumed to be part of the contract.
, Warranty - accurate answers-A statement considered to be guaranteed to be
true and becomes part of the contract.
Implied Warranties - accurate answers-Representations in insurance
contracts qualify as implied warranties.
Insurance Policy Requirements - accurate answers-An insurance policy has 6
requirements: it identifies the parties to the contract; the life or property of
the insured; insurable interest; the risks insured against; the period during
which the insurance is to continue; and the amount of premium.
Concealment - accurate answers-The failure to disclose known facts.
Materiality - accurate answers-In determining how material a piece of
information is to each party of a contract, the value is not determined by the
event itself, but solely by the influence this information would have in forming
an estimate of the advantages or the disadvantages of the contract.
Unilateral Contract - accurate answers-If only one party to an insurance
contract has made a legally enforceable promise.
Express Warranty - accurate answers-Every expressed warranty made at or
before the execution of a policy must be contained in the policy itself, or in
another instrument signed by the insured and referred to in the policy.
Material Misrepresentation - accurate answers-A statement by the applicant
that, upon discovery, would affect the underwriting decision of the insurance
company.
