Alabama Life & Health Insurance | 194 Questions with 100% correct Answers | Verified and updated 2023

Which of the following would be considered a speculative risk? - The possibility the painting you bought might be a long-lost masterpiece A speculative risk is one in which there is a chance for either loss or gain. Example: Gambling, Casino's, Lottery, etc. All of the other choices describe pure risk, where there is no chance of gain, only a chance of loss exists. Which is the proper term for a company owned by its policy owners? - A mutual insurance company A producer who is acting as an agent is representing: - Always the insurer All of the following are elements of a contract, except: - Authority All enforceable contracts must include these characteristics: offer and acceptance (agreement), considerations, competent parties, and legal purpose. Authority is not considered one of the elements of a legal contract. Each of the following would be an element in the definition of fraud, except: - An individual warrants a fact stated on the application A warranted fact is one guaranteed to be true. Although no statement on an application is regarded as warranty, no fraud is involved if a statement is guaranteed to be true. Examples of Fraud - Intentional material misrepresentation with the intent of causing injury to another party Withholding of known material facts A false statement on the application that is material to the acceptance of the risk