Primerica-General Insurance Exam
Questions 100% Correct Answers
New Update
Adverse selection is a concept best described as: - Answers -✔✔ risks with higher
probability of loss seeking insurance more often than other risks
Courts will interpret any ambiguity in an insurance contract: - Answers -✔✔ in the favor
of the insured- insurance policies are contracts of adhesion. the insurer writes the
contract and the insured accepts the contract as it is written. when ambiguities exist,
courts generally rule in the favor of the insured.
which of the following is NOT an essential element of an insurance contract?
a. counteroffer
b. consideration
c. agreement
d. legal purpose - Answers -✔✔ a. counteroffer- is not required for a contract to be
legally binding
4 essential elements are
agreement and acceptance
consideration
competent parties
legal purpose
an insured modifies his insurance claims, illegally adjusting them to display a lower
amount. what insurance concept does this violate? - Answers -✔✔ utmost good faith
which insurer is owned by stockholders who have the usual rights of ownership,
including the right of voting and incurring profits or losses? - Answers -✔✔ Stock
insurance
the authority granted to an agent through the agent's contract is referred to as: -
Answers -✔✔ Express authority: express powers are written into the contract between
the insurer and the agent
A participating insurance policy may: - Answers -✔✔ pay dividends to the policy owner
based upon actual mortality cost, plus interest earned, less expenses of running the
business
When an insurance company agrees to automatically assume a portion of the risk
written by another insurance company, it is known as a(n): - Answers -✔✔
Reinsurance treaty-insurers limit their exposure to catastrophic losses by purchasing
, insurance from a reinsurance company. a reinsurance agreement whereby the re
insurer automatically assumes the risks ceded to it is a reinsurance treaty.
an individual's tendency to be dishonest would be indicative of a: - Answers -✔✔ moral
hazard-an applicant that is dishonest in completing an application for insurance or
submitting fraudulent claims would be deemed a moral hazard and could be uninsurable
from an underwriting standpoint
insurance companies may be classified according to the legal form of their ownership.
the typeof company organized to return any surplus money to their policyholders is a: -
Answers -✔✔ Mutual insurer-mutual companies are owned and controlled by their
policyholders. any surplus money is returned to the policy holders as dividends.
an insurer incorporated in which of the following locations would be considered a foreign
insurer in Washington D.C.?
a. Canada
b. Washington D.C.
c. Maryland
d. Mexico - Answers -✔✔ c. Maryland-foreign is a insurance company that is
incorporated in another state or territorial possession. Mexico and Canada are foreign
countries, so their insurers will be considered alien. Insurer that is incorporated and
operates in Washington D.C. would be considered domestic.
According to the Law of Agency, a principal is represented by a/an: - Answers -✔✔
Agent-a person who acts for another person or entity known as the principal with regard
to contractual arrangements with third parties
an insured purchased an insurance policy 5 years ago. last year she received a
dividend check from the insurance company which 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? - Answers -✔✔ Mutual-funds not paid out after paying claims and other
operating costs are returned to the policy owners in the form of a dividend. if all funds
are paid out, no dividends are paid.
units with the same or similar exposure to loss are referred to as: - Answers -✔✔
homogeneous-the basis of insurance is sharing risk between a large homogeneous
group with similar exposure to loss.
what authorities can an agent hold? - Answers -✔✔ express and implied
What company produces evaluations of insurer financial status often used by the
Insurance Department? - Answers -✔✔ AM Best & Company- assigns ratings to life,
property and casualty insurance companies based upon the financial stability of the
insurer.
Questions 100% Correct Answers
New Update
Adverse selection is a concept best described as: - Answers -✔✔ risks with higher
probability of loss seeking insurance more often than other risks
Courts will interpret any ambiguity in an insurance contract: - Answers -✔✔ in the favor
of the insured- insurance policies are contracts of adhesion. the insurer writes the
contract and the insured accepts the contract as it is written. when ambiguities exist,
courts generally rule in the favor of the insured.
which of the following is NOT an essential element of an insurance contract?
a. counteroffer
b. consideration
c. agreement
d. legal purpose - Answers -✔✔ a. counteroffer- is not required for a contract to be
legally binding
4 essential elements are
agreement and acceptance
consideration
competent parties
legal purpose
an insured modifies his insurance claims, illegally adjusting them to display a lower
amount. what insurance concept does this violate? - Answers -✔✔ utmost good faith
which insurer is owned by stockholders who have the usual rights of ownership,
including the right of voting and incurring profits or losses? - Answers -✔✔ Stock
insurance
the authority granted to an agent through the agent's contract is referred to as: -
Answers -✔✔ Express authority: express powers are written into the contract between
the insurer and the agent
A participating insurance policy may: - Answers -✔✔ pay dividends to the policy owner
based upon actual mortality cost, plus interest earned, less expenses of running the
business
When an insurance company agrees to automatically assume a portion of the risk
written by another insurance company, it is known as a(n): - Answers -✔✔
Reinsurance treaty-insurers limit their exposure to catastrophic losses by purchasing
, insurance from a reinsurance company. a reinsurance agreement whereby the re
insurer automatically assumes the risks ceded to it is a reinsurance treaty.
an individual's tendency to be dishonest would be indicative of a: - Answers -✔✔ moral
hazard-an applicant that is dishonest in completing an application for insurance or
submitting fraudulent claims would be deemed a moral hazard and could be uninsurable
from an underwriting standpoint
insurance companies may be classified according to the legal form of their ownership.
the typeof company organized to return any surplus money to their policyholders is a: -
Answers -✔✔ Mutual insurer-mutual companies are owned and controlled by their
policyholders. any surplus money is returned to the policy holders as dividends.
an insurer incorporated in which of the following locations would be considered a foreign
insurer in Washington D.C.?
a. Canada
b. Washington D.C.
c. Maryland
d. Mexico - Answers -✔✔ c. Maryland-foreign is a insurance company that is
incorporated in another state or territorial possession. Mexico and Canada are foreign
countries, so their insurers will be considered alien. Insurer that is incorporated and
operates in Washington D.C. would be considered domestic.
According to the Law of Agency, a principal is represented by a/an: - Answers -✔✔
Agent-a person who acts for another person or entity known as the principal with regard
to contractual arrangements with third parties
an insured purchased an insurance policy 5 years ago. last year she received a
dividend check from the insurance company which 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? - Answers -✔✔ Mutual-funds not paid out after paying claims and other
operating costs are returned to the policy owners in the form of a dividend. if all funds
are paid out, no dividends are paid.
units with the same or similar exposure to loss are referred to as: - Answers -✔✔
homogeneous-the basis of insurance is sharing risk between a large homogeneous
group with similar exposure to loss.
what authorities can an agent hold? - Answers -✔✔ express and implied
What company produces evaluations of insurer financial status often used by the
Insurance Department? - Answers -✔✔ AM Best & Company- assigns ratings to life,
property and casualty insurance companies based upon the financial stability of the
insurer.
