WebCE General Insurance & Life Insurance Exam Questions With Answers Latest Updated 2024 (Graded A+)

WebCE General Insurance & Life Insurance Exam Questions With Answers Latest Updated 2024 (Graded A+) 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