NY LIFE INSURANCE TEST BANK 2026
QUESTIONS WITH SOLUTIONS GRADED A+
◉ Speculative Risk. Answer: A chance of loss, no loss, or gain.
Ex: Gambling.
◉ Insurance Definition. Answer: Transfer of Pure Risk to Insurance
company in consideration for a premium.
◉ Risk. Answer: Chance at loss.
◉ Exposure. Answer: Condition that could result in loss.
◉ Hazard. Answer: Something that increases the chance of loss
◉ To be insurable, _____________. Answer: Losses must be calculable
◉ Peril. Answer: Cause of loss
Ex: a fire
,◉ Law of Large Numbers. Answer: Allows insurers to predict claims
more accurately.
Applies to groups, not individuals.
The more people in a group, the more accurate the predictions.
◉ Stock Insurer. Answer: may pay dividends to its shareholders
(stockholders), but they may not be guaranteed.
◉ Reciprocal Insurance Company / Reciprocal Insurer. Answer:
Managed by an attorney-in-fact.
Unincorporated association of individuals who insure each other.
◉ Foreign Insurance Company. Answer: An insurance company doing
business in a state other than the one in which it is incorporated
◉ Alien Insurance Company. Answer: An insurance company that
operates in a country other than the country in which it was organized.
◉ Domestic Insurance Company. Answer: A company that resides and is
incorporated under the laws of the state in which its home office is
located.
, ◉ Who do producers represent? Answer: Producers represent the
Insurance Company, not the insured.
◉ Express Authority. Answer: The authority granted to an agent by
means of the agent's written contract.
◉ Implied Authority. Answer: Authority that is not expressed or written
into the contract, but which the agent is assumed to have in order to
transact the business of insurance for the principal.
◉ Apparent Authority. Answer: The authority an agent is believed by
third parties to have because of the behavior of the principal.
◉ Independent Producers. Answer: Own their own accounts and are not
insurance company employees
◉ Elements of a Legal Contract. Answer: Consideration
Offer
Acceptance
Legal Purpose
QUESTIONS WITH SOLUTIONS GRADED A+
◉ Speculative Risk. Answer: A chance of loss, no loss, or gain.
Ex: Gambling.
◉ Insurance Definition. Answer: Transfer of Pure Risk to Insurance
company in consideration for a premium.
◉ Risk. Answer: Chance at loss.
◉ Exposure. Answer: Condition that could result in loss.
◉ Hazard. Answer: Something that increases the chance of loss
◉ To be insurable, _____________. Answer: Losses must be calculable
◉ Peril. Answer: Cause of loss
Ex: a fire
,◉ Law of Large Numbers. Answer: Allows insurers to predict claims
more accurately.
Applies to groups, not individuals.
The more people in a group, the more accurate the predictions.
◉ Stock Insurer. Answer: may pay dividends to its shareholders
(stockholders), but they may not be guaranteed.
◉ Reciprocal Insurance Company / Reciprocal Insurer. Answer:
Managed by an attorney-in-fact.
Unincorporated association of individuals who insure each other.
◉ Foreign Insurance Company. Answer: An insurance company doing
business in a state other than the one in which it is incorporated
◉ Alien Insurance Company. Answer: An insurance company that
operates in a country other than the country in which it was organized.
◉ Domestic Insurance Company. Answer: A company that resides and is
incorporated under the laws of the state in which its home office is
located.
, ◉ Who do producers represent? Answer: Producers represent the
Insurance Company, not the insured.
◉ Express Authority. Answer: The authority granted to an agent by
means of the agent's written contract.
◉ Implied Authority. Answer: Authority that is not expressed or written
into the contract, but which the agent is assumed to have in order to
transact the business of insurance for the principal.
◉ Apparent Authority. Answer: The authority an agent is believed by
third parties to have because of the behavior of the principal.
◉ Independent Producers. Answer: Own their own accounts and are not
insurance company employees
◉ Elements of a Legal Contract. Answer: Consideration
Offer
Acceptance
Legal Purpose
