ALABAMA LIFE & HEALTH INSURANCE EXAM
,Which of the following would be considered a speculative risk?
- Precise Answer ✔✔The possibility the painting you bought
might be a long-lost masterpiece
A speculative risk is one in which there is a chance for either
loss or gain. Example: Gambling, Casino's, Lottery, etc. All of
the other choices describe pure risk, where there is no chance of
gain, only a chance of loss exists.
Which is the proper term for a company owned by its policy
owners? - Precise Answer ✔✔A mutual insurance company
A producer who is acting as an agent is representing: - Precise
Answer ✔✔Always the insurer
All of the following are elements of a contract, except: - Precise
Answer ✔✔Authority
All enforceable contracts must include these characteristics:
offer and acceptance (agreement), considerations, competent
parties, and legal purpose. Authority is not considered one of the
elements of a legal contract.
,Each of the following would be an element in the definition of
fraud, except: - Precise Answer ✔✔An individual warrants a
fact stated on the application
A warranted fact is one guaranteed to be true. Although no
statement on an application is regarded as warranty, no fraud is
involved if a statement is guaranteed to be true.
Examples of Fraud - Precise Answer ✔✔Intentional material
misrepresentation with the intent of causing injury to another
party
Withholding of known material facts
A false statement on the application that is material to the
acceptance of the risk
A company that is licensed to sell insurance in a particular state
is: - Precise Answer ✔✔An authorized Company
, In order to be valid, a contract must be between individuals
considered legally able to enter into an agreement. This principle
is known as: - Precise Answer ✔✔Competent parties
An insurance contract is an aleatory contract. This means: -
Precise Answer ✔✔Equal value is not given by both parties to
the contract
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of last
resort for individuals or businesses that have been rejected by
voluntary market insurers. - Precise Answer ✔✔Residual
To address adverse selection what can an insurer legally do? -
Precise Answer ✔✔Establish and enforce sound underwriting
practices
Underwriting helps to protect the insurer against adverse
selection and accepting risks that are more likely than average to
suffer losses.
,Which of the following would be considered a speculative risk?
- Precise Answer ✔✔The possibility the painting you bought
might be a long-lost masterpiece
A speculative risk is one in which there is a chance for either
loss or gain. Example: Gambling, Casino's, Lottery, etc. All of
the other choices describe pure risk, where there is no chance of
gain, only a chance of loss exists.
Which is the proper term for a company owned by its policy
owners? - Precise Answer ✔✔A mutual insurance company
A producer who is acting as an agent is representing: - Precise
Answer ✔✔Always the insurer
All of the following are elements of a contract, except: - Precise
Answer ✔✔Authority
All enforceable contracts must include these characteristics:
offer and acceptance (agreement), considerations, competent
parties, and legal purpose. Authority is not considered one of the
elements of a legal contract.
,Each of the following would be an element in the definition of
fraud, except: - Precise Answer ✔✔An individual warrants a
fact stated on the application
A warranted fact is one guaranteed to be true. Although no
statement on an application is regarded as warranty, no fraud is
involved if a statement is guaranteed to be true.
Examples of Fraud - Precise Answer ✔✔Intentional material
misrepresentation with the intent of causing injury to another
party
Withholding of known material facts
A false statement on the application that is material to the
acceptance of the risk
A company that is licensed to sell insurance in a particular state
is: - Precise Answer ✔✔An authorized Company
, In order to be valid, a contract must be between individuals
considered legally able to enter into an agreement. This principle
is known as: - Precise Answer ✔✔Competent parties
An insurance contract is an aleatory contract. This means: -
Precise Answer ✔✔Equal value is not given by both parties to
the contract
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of last
resort for individuals or businesses that have been rejected by
voluntary market insurers. - Precise Answer ✔✔Residual
To address adverse selection what can an insurer legally do? -
Precise Answer ✔✔Establish and enforce sound underwriting
practices
Underwriting helps to protect the insurer against adverse
selection and accepting risks that are more likely than average to
suffer losses.
