Aflac Insurance Licensing Test- Key Concepts Questions & Answers Already Graded A+

Insurance is defined as... - the transfer of PURE risk to the insurance company in consideration for a premium Pure risk is... - the chance of loss without any possibility for gain Speculative risk is... - the possibility for gain or loss and is not insurable Risk is defined as... - the chance for loss An exposure is... - a condition that could result in a loss A hazard is... - something that increase the chance of loss The presence of a physical hazard... - increases the chance of a loss occurring A peril is defined as... - a cause of loss (such as a fire) To be insurable... - losses must be calculable The law of large numbers allows... - insurers to predict claims more accurately The law of large numbers applies... - to groups of people, not to individuals the more people in the group, the more accurate predictions are Most insurers buy reinsurance to... - protect themselves in the event of a catastrophic lossInsurance laws are not... - required to be uniform from one state to another A stock insurer may... - pay dividends to its shareholders (stockholders), but they may not be guaranteed. A reciprocal insurance company is... - managed by an attorney-in-fact A reciprocal insurer is defined as... - an unincorporated association of individuals who insure each other The government offers insurance primarily based upon... - social needs (such as flood insurance and workers compensation) but does not offer insurance for the purpose of preventing fraud A foreign company has... - their home office in another state An alien company is... - an insurer incorporated outside of the US, who sells in the US A producer may be personally liable when... - violating the producer's contract Producers represent... - the insurance company, not the insured Independent producers own... - their own accounts and are not insurance company employees Producers have... - express, implied, and apparent authority Express authority is... - the authority a producer has that is written in his/her contractA producer's binding authority (if any) is... - expressed (written down) in the producer's contract with the insurer the producer represents Implied authority is... - the authority not expressly (written) granted, but is actual authority the producer has to transact normal business activities