WebCE General Insurance & Life Insurance Exam Questions and Answers Rated A+ Updated 2023/2024

WebCE General Insurance & Life Insurance Exam Questions and Answers Rated A+ Updated 2023/2024. Buying life or health insurance is an example of which risk management technique? risk avoidance risk reduction risk retention risk transfer - risk transfer What is the mathematical concept of probability that helps insurers estimate the statistical likelihood of mortality or morbidity losses at any given age? law of large numbers underwriting principle law of probability actuarial principle - law of large numbers A person who refuses to engage is risky activities like rock climbing for fear of injury or death is demonstrating which risk management technique? risk avoidance risk reduction risk retention risk sharing - risk avoidance Which of the following is an insurable risk? the possibility of losing money in stock investments the possibility of losing money gambling in Las Vegas the possibility of becoming disabled and unable to earn an income the possibility of one's home value decreasing due to a drop in market prices - the possibility of becoming disabled and unable to earn an income All the following statements regarding reinsurance are correct EXCEPT: Reinsurance is a risk-sharing process used by insurance companies. Claims are paid to the policyowner separately by each insurer participating in the reinsurance agreement. The insurer accepting some of the risk being transferred from another insurer is known as the reinsuring company. The insurer seeking to transfer some of its risk to another insurer is known as the ceding company. - Claims are paid to the policyowner separately by each insurer participating in the reinsurance agreement. All of the following are characteristics of a stock insurance company EXCEPT: They are governed by a board of directors. They may issue dividends. They have minimum financial capital requirements that must be met before they can conduct business. They are owned by policyowners. - They are owned by policyowners. All of the following statements regarding the career agency distribution system are correct EXCEPT: The managerial form of career agency system uses company employees as the agency managers. There are two types, the general agency system and the managerial system. It uses agents who primarily if not exclusively represent one insurer. Personal producing general agents (PPGAs) are commonly hired to manage career agencies. - Personal producing general agents (PPGAs) are commonly hired to manage career agencies. The federal Risk Retention Act of 1986 contains guidelines for which of the following entities? reinsurance companies surplus lines insurance companies Fraternal insurance companies risk retention groups - risk retention groups Which of the following best describes an agent's responsibilities? An agent has no fiduciary duty toward insurers, applicants, or insureds. An agent has to act in the best interests of insureds, applicants, and insurers. An agent only has to act in the best interests of the insured or applicant, but not the insurer. An agent only has to act in the best interests of the insurer he or she represents. - An agent has to act in the best interests of insureds, applicants, and insurers. An insurance producer tells a life insurance applicant that he has the authority to waive the medical exam that is normally required by the insurer with every application. The insurer may be required to accept the application without a medical exam due to the producer's: implied authority express authority apparent authority imputed authority - apparent authority All of the following are part of a producer's responsibilities to an applicant EXCEPT: avoiding replacing an insurance policy unless doing so will clearly benefit the applicant research other insurance companies' insurance products if requested by the applicant disclose all important information about a proposed policy recommend insurance products that are suitable for the customer's needs - research other insurance companies' insurance products if requested by the applicant The purpose for the Policy Summary, which must be given to every insurance applicant before an application is signed, is to: explain the step-by-step process involved in purchasing the recommended product explain the general features, benefits, and conditions of the type of insurance being considered disclose all the hidden costs associated with the policy being applied for provide buyers with details of the specific insurance contract they are considering for purchase - provide buyers with details of the specific insurance contract they are considering for purchase If an applicant for an insurance policy submits an application without the first premium, which of the following is correct? The insurer may not make a counteroffer to the applicant. The applicant has invited the insurer to make an offer. The insurer has made an offer to the applicant. The applicant has made an offer to the insurer. - The applicant has invited the insurer to make an offer. How long from when an insurance contract is issued does an insurance company have to void a life insurance policy on the basis of fraud? 12 months 24 months 18 months 6 months - 24 months Statements made on a life insurance application are considered: conditional promises representations warranties unconditional promises - representations An applicant for a $500,000 whole life insurance policy pays the initial premium along with his application. In this case, what has the applicant done? accepted an offer from the insurer accepted a counteroffer from the insurer made a counteroffer to the insurer made an offer to the insurer - made an offer to the insurer All the following statements regarding perils and hazards are correct EXCEPT: A hazard is a condition that raises the chance of a peril occurring. Smoking cigarettes is an example of a peril. A peril is the immediate cause of a loss and is the event that insurance protects against. Indifference to loss is an example of a hazard. - Smoking cigarettes is an example of a peril. The tendency of a person diagnosed with a serious illness to try to buy life or health insurance is known as: adverse selection concealment risk avoidance exposure reduction - adverse selection All of the following are elements of an insurable risk EXCEPT: Any losses resulting from the insured peril must be definable as to time, cause, and location. The loss must be measurable. The insured peril must be outside of the insured's control. Losses resulting from the insured peril must be potentially catastrophic. - Losses resulting from the insured peril must be potentially catastrophic. From an insurance perspective, the term "loss exposure" means: the extent to which an insurer discloses its marketing practices the extent to which insurers are required to open their financial books for public inspection the extent to which an insurer is subject to a possible loss the extent to which an insurer discloses the components making up its policy premium rates - the extent to which an insurer is subject to a possible loss A not-for-profit insurance provider operated by an organization that has a representative form of leadership, operates on a lodge system, and exists solely for the benefit of its members and their beneficiaries is called a: mutual insurance company home service insurance company risk retention group fraternal insurance company - fraternal insurance company Which of the following is an example of an unauthorized insurance company in Illinois? Company C, a Florida-based company that does not hold a certificate of authority Illinois but whose products are approved by the Illinois insurance department Company A, an Illinois-based company that holds a certificate of authority in Illinois and 32 other states Company B, an Iowa-based company that does not hold a certificate of authority in Illinois and sells products that are not approved by the Illinois insurance department Company D, a Canadian company that holds a certificate of authority in Illinois - Company B, an Iowa-based company that does not hold a certificate of authority in Illinois and sells products that are not approved by the Illinois insurance department The Excalibur Insurance Company, domiciled in Iowa, transacts business legally in Nebraska. In Nebraska, Excalibur is a(n): non-admitted insurance company alien insurance company foreign insurance company domestic insurance company - foreign insurance company The Royale Insurance Company, domiciled in Toronto, Canada, transacts business legally in New York. In New York, Royale is classified as a(n): unauthorized insurance company domestic insurance company alien insurance company foreign insurance company - alien insurance company The contract between the producer and insurer, setting forth certain acts and duties the producer is specifically authorized to perform, describes the producer's: express authority implied authority agency authority apparent authority - express authority The main purpose for errors and omissions insurance (E&O) is to: cover damages that arise due to services a producer non-willfully failed to render allow the producer to be less diligent in complying with insurance sales disclosure requirements provide legal protection to the producer who is charged with willfully engaging in an unfair trade practice pay for an insurance company executive to meet with a policyowner to correct an error made by the producer during the sales process - cover damages that arise due to services a producer non-willfully failed to render With respect to the field of insurance, who are the two parties bound by the law of agency? the producer and the policyowner the insurance company and the producer the insurer and the insured the state insurance department and the insurer - the insurance company and the producer In its fiduciary responsibility to its principal, a producer is required to do all the following EXCEPT: fully disclose to the insurer all pertinent information that affects the placement of an insurance policy solicit business that is certain to be profitable to the insurer fully account for premiums and submit them to the insurer on a timely basis carry out authorized activities with reasonable care - solicit business that is certain to be profitable to the insurer When first meeting prospective insurance applicants, a producer must give them a document that explains the general features, benefits, and conditions of the type of insurance being considered, which is called a policy summary buyer's guide key points document prospectus - buyer's guide In addition to the fiduciary responsibility they have with all customer premiums and assets, producers are expected to do all the following EXCEPT: avoid all forms of rebating disclose all pertinent information concerning a proposed policy seek opportunities to replace existing policies with newer products make sure all product recommendations are suitable for the customer - seek opportunities to replace existing policies with newer products All the following statements regarding apparent authority are correct EXCEPT: The agent's contract does not create it. The insurer does not intend it. The insurer is not liable for an agent's acts when he or she is acting under apparent authority. A third party reasonably believes that the producer has it based on the reasonable statements and actions by the insurer and agent. - The insurer is not liable for an agent's acts when he or she is acting under apparent authority. The purpose for the Buyer's Guide, which must be given to every insurance prospect in the first meeting with a producer, is to: advise the buyer to consider an alternative to the insurance product being considered explain the general features, benefits, and conditions of the type of insurance being considered provide buyers with details of the insurance policy they are considering for purchase explain the step-by-step process involved in purchasing the recommended product - explain the general features, benefits, and conditions of the type of insurance being considered All the following types of insurance involve a personal contract EXCEPT: a life insurance policy an automobile policy a disability income insurance policy a medical expense insurance policy - a life insurance policy What is the term for voluntarily giving up a known right? estoppel waiver conditional voidable - waiver Tim had paid only four premiums totaling $1000 on his health insurance policy when he was diagnosed with cancer. The insurance company paid more than $100,000 to cover the medical bills for his treatment during the next year. This situation demonstrates which of the following characteristics of insurance contracts? They are contracts of adhesion. They are unilateral. They are personal. They are aleatory. - They are aleatory. Which of the following statements about representations and warranties is most correct? Promises made by the insurer in the insurance contract are deemed representations. Insurers can rescind (cancel) an insurance contract if a misrepresentation is discovered on the application during the contestability period. A statement made on the application which is true to the applicant's best knowledge is deemed a misrepresentation if it is later discovered to be inaccurate. Statements made by the applicant on the application are deemed warranties. - Insurers can rescind (cancel) an insurance contract if a misrepresentation is discovered on the application during the contestability period. If the Texas insurance commissioner asks an insurer or producer for information about its financial condition or any matter involving its business transactions, the insurer or agent must reply in writing within: 45 days 48 hours 30 days 10 days - 10 days To a consumer in Texas, an insurance company that is headquartered in Missouri but admitted to do business in Texas is a(n): nonresident insurer domestic insurer alien insurer foreign insurer - foreign insurer It is illegal for an insurance company to transact insurance business in Texas without: selling all types insurance maintaining its corporate home office in Texas a certificate of authority maintaining both a career agency and independent broker distribution system - a certificate of authority The Texas Department of Insurance regulates the state's insurance industry. Which of the following is NOT one of its responsibilities? issuing certificates of authority to insurers licensing producers imposing civil and criminal penalties on producers who violate the state's insurance laws overseeing the marketing practices of insurers - imposing civil and criminal penalties on producers who violate the state's insurance laws Harvey and Jim want to set up an insurance partnership that would advertise and place insurance. They both will sell policies in the partnership. How many licenses are required? three licenses-one for each partner and one for the partnership two licenses only-one each for Jim and Harvey one license, for the partnership only one agent's license for either Jim or Harvey - three licenses-one for each partner and one for the partnership Abby, who lives in New Mexico where she is a licensed life insurance agent, wants to apply for a nonresident license in Texas. To do so, she must submit which of the following to TDI? a copy of her criminal history records an application, fee and letter of certification from her home state a set of her fingerprints proof that she has completed an insurance pre-license education course - an application, fee and letter of certification from her home state Which of the following persons must obtain a life and health insurance counselor's license? a licensed life insurance agent who sells policies for a commission a licensed lawyer a salaried employee of an insurance company a financial advisor who offers insurance recommendations for a fee - a financial advisor who offers insurance recommendations for a fee Tom, Henry, Stacey, and Alison are licensed agents in Texas. Given the following circumstances, which of them will NOT be subject to disciplinary action by the Texas Department Insurance? Alison, who was convicted of a misdemeanor traffic violation Tom, who misrepresented the terms of an insurance policy to induce a prospect to buy the policy Stacey, who is primarily engaged in controlled business Henry, who willfully violated Texas insurance laws by misappropriating premiums - Alison, who was convicted of a misdemeanor traffic violation Samantha has a life insurance license in Missouri and wants to sell life insurance part-time in Texas. Which of the following describes what she can or cannot do given her licenses? She can sell in Texas using her Missouri license. She must work full-time as an agent in Texas for Texas to grant a license to her. She must submit a letter of certification and an application. She cannot sell in Texas unless she establishes a residence here. - She must submit a letter of certification and an application. Larry, Brian, Susan, and Jennifer just started working for AllPro Insurance Company in Texas. Based on their job descriptions below, which of them is NOT an agent? Jennifer, who advertises insurance policies for AllPro Larry, who receives insurance applications from the public Susan, who collects insurance premiums for AllPro Brian, who is a vice president in AllPro's human resources department and does not receive commissions - Brian, who is a vice president in AllPro's human resources department and does not receive commissions Molly, Lisa, Andy, and Chris want to become licensed agents in Texas. Which of them would be eligible to obtain a license? Andy, who only wants to work part-time as an agent but otherwise meets the licensing requirements Chris, who passed the licensing examination 18 months ago and otherwise meets the licensing requirements to become a resident agent Molly, who is 17 years old and will be graduating from high school this year Lisa, who failed the licensing examination but completed an insurance prelicense education course - Andy, who only wants to work part-time as an agent but otherwise meets the licensing requirements In Texas, a person is considered to be an agent (producer) if he or she does any of the following on behalf of an insurance company, EXCEPT: distributes information relating to coverage or rates adjusts a claim or loss writes and submits an insurance application to the insurer processes applications as a salaried employee in the insurer's home office - processes applications as a salaried employee in the insurer's home office Janet has been continuously licensed as an agent in Texas for the past 25 years. Her friend Steven is a nonresident licensee in Texas and every year completes his state's continuing education requirements. When they ask you for advice on meeting the Texas continuing education requirements, you inform them that: only Steven must complete Texas's continuing education requirements neither Steven nor Janet needs to comply with Texas's continuing education requirements only Janet must complete Texas's continuing education requirements both Steven and Janet must comply with Texas's continuing education requirements - neither Steven nor Janet needs to comply with Texas's continuing education requirements Janet is a licensed life insurance agent in Texas and was so busy with her insurance practice that she forgot to complete all of her continuing education credits. How long is the grace period she has to make up the missing credits? six months 45 days She cannot make up the missing credits. 90 days - She cannot make up the missing credits. To maintain their license, resident insurance producers in Texas must meet a continuing education (CE) requirement: once, before the end of their initial two-year license renewal cycle once, within five years of becoming licensed