Primerica Life Insurance License Questions and correct answers

Primerica Life Insurance License Questions and correct answers Which law is the foundation of statistical prediction of loss upon which rates for insurance are calculated? A) Law of Group Evaluation C) Law of Masses D) Law of Averages A producer who fails to segregate premium monies from his own personal funds is guilty of: A) Theft C) Larceny D) Embezzlement In insurance, an offer is usually made when: . B) The insurer approves the application and receives the initial premium C) The agent hands the policy to the policyholder. D) An agent explains a policy to a potential applicant. An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? B) Reciprocal C) Nonprofit service organization D) Stock Which of the following insurance options would be considered a risk-sharing arrangement? A) Stock B) Mutual C) Surplus Lines On a participating insurance policy issued by a mutual insurance company, dividends paid to policy holders are: A) Guaranteed C) Paid at a fixed rate every year. D) Taxable as ordinary income. If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? A) Nonforfeiture B) Indemnity D) Cease and desist Who might receive dividends from a mutual insurer? A) Stockholders B) Agents D) Subscribers An individuals tendency to be dishonest would be indicative of a: A) Morale hazard B) Pure hazard C) Physical hazard Which of the following best describes the aleatory nature of an insurance contract? A) Only one of the parties being legally bound by the contract B) Ambiguities are interpreted in favor of the insured C) Policies are submitted to the insurer on a take-it-or-leave-it basis Which of the following is true regarding a risk retention group? . B) It provides support for underwriters and is not an insurance company. C) It is a benefit society formed to provide insurance for members of an affiliated lodge. D) It is a company owned by the stockholders that provides nonparticipating policies.. An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A) Waiver B) Utmost Good Faith C) Estoppel In forming an insurance contract, when does acceptance usually occur? A) When an insurer delivers the policy B) When an insurer receives an application C) When an insured submits an application . The authority granted to an agent through the agent's contract is referred to as: A) Absolute authority C) Apparent authority D) Implied authority Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? B)Apparent C)Assumed D) Express In terms of parties to a contract, which of the following does NOT describe a competent party? A) The person must be mentally competent to understand the contract. C) The person must not be under the influence of drugs or alcohol. D) The person must be of legal age. A situation in which a person can only lose or have no change represents: A) Adverse selection B) Hazard D) Speculative risk Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A) Indemnity B) Representation D) Concealment Which of the following is NOT a characteristic of an insurable risk? A) The loss must be measurable B) The loss exposure must be large D) The loss must be due to chance. An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? A) Adhesion B) Conditional D) Good Health The insurer may suspect that a moral hazard exists if the policyholder: