Webce Insurance test questions with verified answers.pdf

Webce General Insurance & Life Insurance Exam
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Questions and Answers (Verified Answers)
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1. Buying life or health insurance is an example of which risk managementte
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chnique?


risk avoidance
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risk reduction
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risk retention
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risk transfer
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: risk transfer
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2. What is the mathematical concept of probability that helps insurers estimateth
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e statistical likelihood of mortality or morbidity losses at any given age?
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law of large numbers u
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nderwriting principlel k k




aw of probability
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actuarial principle k




: law of large numbers
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,3. A person who refuses to engage is risky activities like rock climbing for fearof i
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njury or death is demonstrating which risk management technique?
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risk avoidance k k




risk reduction k k




risk retention k




risk sharing k




: risk avoidance
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4. Which of the following is an insurable risk?
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the possibility of losing money in stock investments the
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possibility of losing money gambling in Las Vegas
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the possibility of becoming disabled and unable to earn an income
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the possibility of one's home value decreasing due to a drop in market prices-
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: the possibility of becoming disabled and unable to earn an income
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5. All the following statements regarding reinsurance are correct EXCEPT:
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Reinsurance is a risk-sharing process used by insurance companies.
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Claims are paid to the policyowner separately by each insurer participating inth
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e reinsurance agreement.
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The insurer accepting some of the risk being transferred from another insureris
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known as the reinsuring company.
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,The insurer seeking to transfer some of its risk to another insurer is knownas
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the ceding company.
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: Claims are paid to the policyowner separately by eachinsurer participating in the rei
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nsurance agreement.
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, 6. All of the following are characteristics of a stock insurance company EX-
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CEPT:
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They are governed by a board of directors.T
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hey may issue dividends.
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They have minimum financial capital requirements that must be met beforeth
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ey can conduct business.
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They are owned by policyowners.
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: They are owned by policyowners.
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7. All of the following statements regarding the career agency distributions
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ystem are correct EXCEPT: k k k




The managerial form of career agency system uses company employees asth
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e agency managers.
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There are two types, the general agency system and the managerial system.It
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uses agents who primarily if not exclusively represent one insurer.
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Personal producing general agents (PPGAs) are commonly hired to manage ca
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reer agencies. k




: Personal producing general agents (PPGAs) are commonly hiredto manage career a
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gencies.


8. The federal Risk Retention Act of 1986 contains guidelines for which of thefol
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lowing entities? k




reinsurance companies k

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