AD Banker Chapter 1 Exam 2025/2026 QUESTIONS AND
ANSWERS GUARANTEE A+
An unincorporated organization that is formed by individuals, firms, and business corporations
that exchange insurance on one another and whose members are known as subscribers is called
a:
a. Mutual Insurance Company
b. Fraternal Benefit Society
c. Risk Retention Group
d. Reciprocal Insurance Company - d. Reciprocal Insurance Company
Which of the following would be considered legally competent to enter into a contract?
a. A person who is under the influence of drugs or alcohol
b. A person deemed to be mentally incapacitated
c. A 13-year-old honor student
d. A 25-year-old self-employed person - d. A 25-year-old self-employed person
Which of the following is not marketing and distribution system used by the insurers?
a. Independent Agency
b. Direct Writing
c. Captive Agency
d. Broker Agency - d. Broker Agency
Before an insurer can operate in this state, it must have which of the following?
a. Approval of the National Association of Insurance Commissioners (NAIC)
b. Articles of Incorporation filed with the Secretary of State
c. State Governor's approval
, d. Certificate of Authority issued by the state Insurance Department - d. Certificate of Authority
issued by the state Insurance Department
Which of the following is not a type of hazard for insurance underwriting purposes?
a. Morale
b. Incidental
c. Physical
d. Moral - b. Incidental
All of the following are true of insurance in general, except:
a. It reduces uncertainty
b. It transfers risk
c. It eliminates risk
d. It can reduce risk - c. It eliminates risk
To act as an agent for an insurer, the producer must be __________ by the insurer:
a. Licensed
b. Endorsed
c. Certified
d. Appointed - d. Appointed
_____________ is generally an option only for large corporations who may want to limit their
risk up to a certain dollar amount, then buy insurance above and beyond that amount.
a. Reciprocal insurance
b. Risk retention
c. Mutual insurance
d. Self-insurance - d. Self-insurance
ANSWERS GUARANTEE A+
An unincorporated organization that is formed by individuals, firms, and business corporations
that exchange insurance on one another and whose members are known as subscribers is called
a:
a. Mutual Insurance Company
b. Fraternal Benefit Society
c. Risk Retention Group
d. Reciprocal Insurance Company - d. Reciprocal Insurance Company
Which of the following would be considered legally competent to enter into a contract?
a. A person who is under the influence of drugs or alcohol
b. A person deemed to be mentally incapacitated
c. A 13-year-old honor student
d. A 25-year-old self-employed person - d. A 25-year-old self-employed person
Which of the following is not marketing and distribution system used by the insurers?
a. Independent Agency
b. Direct Writing
c. Captive Agency
d. Broker Agency - d. Broker Agency
Before an insurer can operate in this state, it must have which of the following?
a. Approval of the National Association of Insurance Commissioners (NAIC)
b. Articles of Incorporation filed with the Secretary of State
c. State Governor's approval
, d. Certificate of Authority issued by the state Insurance Department - d. Certificate of Authority
issued by the state Insurance Department
Which of the following is not a type of hazard for insurance underwriting purposes?
a. Morale
b. Incidental
c. Physical
d. Moral - b. Incidental
All of the following are true of insurance in general, except:
a. It reduces uncertainty
b. It transfers risk
c. It eliminates risk
d. It can reduce risk - c. It eliminates risk
To act as an agent for an insurer, the producer must be __________ by the insurer:
a. Licensed
b. Endorsed
c. Certified
d. Appointed - d. Appointed
_____________ is generally an option only for large corporations who may want to limit their
risk up to a certain dollar amount, then buy insurance above and beyond that amount.
a. Reciprocal insurance
b. Risk retention
c. Mutual insurance
d. Self-insurance - d. Self-insurance
