Rhode Island insurance UPDATED Exam
Questions and CORRECT Answers
the role of insurance is to - Correct Answer- transfer the risk of financial loss from an
individual or business to an insurance company
organized and incorporated under state law owned by stockholders who get a paid share of
the company's profit through dividends. also referred to as a nonparticipating or non-par bc
policy holder do not participate in paid dividends - Correct Answer- stock insurance company
organized and incorporated under state law. but they have no stockholders. instead, the
policyholders own the company. owners get paid a share of the companies profits through
dividends. participating or par companies bc policy owners do not participate in paid
dividends - Correct Answer- mutual insurer companies
process of a stock company being converted into a mutual company - Correct Answer-
mutualization
process of a mutual company being converted into a stock company - Correct Answer-
demutualization
an association formed to underwrite and issue insurance like coverage on certain items and
areas that might otherwise be uninsurable - Correct Answer- Lloyds of London
are a specialized branch of the insurance industry that insurers other insurance company's
risk. *is an arrangement by which an insurance company transfers or sells a portion of the
risk to a reinsurance company - Correct Answer- reinsurers
the insurance company transferring the risk - Correct Answer- ceding company
industrial insurance sold by home service or debit insurance companies - Correct Answer-
home service insurers
, when 3rd party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have - Correct Answer- insurable interest in the proposed insured
which is considered a statement that is assured to be true in every respect - Correct Answer-
warranty
which best describes a warranty - Correct Answer- statement guaranteed to be true
which of these is not considered to be an element of an insurance contract - Correct Answer-
negotiating
a life insurance policy would be considered contract without? - Correct Answer- insurable
interest
all of the following (bilateral unilateral aleatory adhesion) are considered to be typical
characteristics describing the nature of an insurance contract except - Correct Answer-
bilateral
in an insurance contract the insurer is the only party who makes a legally enforceable promise
what kind of contract is this - Correct Answer- unilateral
Taking receipt of premiums and holding them for the insurance company is an example of -
Correct Answer- fiduciary responsibility
a policy of adhesion can only be modified by whom - Correct Answer- the insurance
company
In regards to representations or warranties, which of these statements is TRUE? - Correct
Answer- if material to the risk, false representation will void a policy
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called - Correct Answer- representations
life and health insurance policies are - Correct Answer- unilateral contracts
Questions and CORRECT Answers
the role of insurance is to - Correct Answer- transfer the risk of financial loss from an
individual or business to an insurance company
organized and incorporated under state law owned by stockholders who get a paid share of
the company's profit through dividends. also referred to as a nonparticipating or non-par bc
policy holder do not participate in paid dividends - Correct Answer- stock insurance company
organized and incorporated under state law. but they have no stockholders. instead, the
policyholders own the company. owners get paid a share of the companies profits through
dividends. participating or par companies bc policy owners do not participate in paid
dividends - Correct Answer- mutual insurer companies
process of a stock company being converted into a mutual company - Correct Answer-
mutualization
process of a mutual company being converted into a stock company - Correct Answer-
demutualization
an association formed to underwrite and issue insurance like coverage on certain items and
areas that might otherwise be uninsurable - Correct Answer- Lloyds of London
are a specialized branch of the insurance industry that insurers other insurance company's
risk. *is an arrangement by which an insurance company transfers or sells a portion of the
risk to a reinsurance company - Correct Answer- reinsurers
the insurance company transferring the risk - Correct Answer- ceding company
industrial insurance sold by home service or debit insurance companies - Correct Answer-
home service insurers
, when 3rd party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have - Correct Answer- insurable interest in the proposed insured
which is considered a statement that is assured to be true in every respect - Correct Answer-
warranty
which best describes a warranty - Correct Answer- statement guaranteed to be true
which of these is not considered to be an element of an insurance contract - Correct Answer-
negotiating
a life insurance policy would be considered contract without? - Correct Answer- insurable
interest
all of the following (bilateral unilateral aleatory adhesion) are considered to be typical
characteristics describing the nature of an insurance contract except - Correct Answer-
bilateral
in an insurance contract the insurer is the only party who makes a legally enforceable promise
what kind of contract is this - Correct Answer- unilateral
Taking receipt of premiums and holding them for the insurance company is an example of -
Correct Answer- fiduciary responsibility
a policy of adhesion can only be modified by whom - Correct Answer- the insurance
company
In regards to representations or warranties, which of these statements is TRUE? - Correct
Answer- if material to the risk, false representation will void a policy
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called - Correct Answer- representations
life and health insurance policies are - Correct Answer- unilateral contracts
