AD Banker Chapter 1 Quiz 100% Satisfactions

Members of the ___________ include state and territorial insurance commissioners or regulators. - ANSWERSNational Association of Insurance Commissioners (NAIC) Before an insurer can operate in this state, it must have which of the following? - ANSWERSCertificate of Authority issued by the state Insurance Department The contract type in which only one party is legally bound to its contractual obligations after a premium is paid is a(n)_______ contract. - ANSWERSUnilateral Minimizing the chance of a loss is considered which of the following ways of managing risk? - ANSWERSReduction A person who negotiates insurance contracts with insurers on behalf of an applicant is known as a(n): - ANSWERSBroker Those insurers that are incorporated in another state, but doing business in this state, are considered: - ANSWERSForeign Risk reduction is: - ANSWERSMinimizing the chance of loss The __________ monitors the insurance industry and identifies issues and gaps in the state regulation of insurers. - ANSWERSFederal Insurance Office (FIO) An applicant completes the application and submits it to the insurer along with a premium check. When is the applicant's offer considered accepted? - ANSWERSWhen the insurer issues a policy When the exchange of value is unequal, the contract is considered: - ANSWERSAleatory In a reinsurance transaction, the company that wishes to transfer all or a portion of the financial risk of loss is known as the _______ company. - ANSWERSCeding Dividends issued by Stock insurers are paid to: - ANSWERSStockholders An unincorporated organization that is formed by individuals, firms, and business corporations that exchange insurance on one another and whose members are known as subscribers is called a: - ANSWERSReciprocal Insurance Company A false statement in the application that can render the contract void, if material to the acceptance of the risk, is known as a: - ANSWERSMisrepresentation A statement that a person makes and guarantees to be true is a: - ANSWERSWarranty The process of analyzing risk exposures and designing programs to handle them is known as: - ANSWERSRisk Management The_______ department of an insurance company is responsible for providing service to policyholders at the time of a loss. - ANSWERSClaims Which of the following manufactures and sells insurance coverage in the form of insurance policies or contracts of insurance? - ANSWERSInsurance companies Which of the following is not an essential element of an insurable risk? - ANSWERSThe loss must be intentional As long as all parties perform certain duties as obligated, coverage will remain in effect. This defines a: - ANSWERSConditional contract Insurance ____________ are captive or independent organizations that recruit, contract with, train, and support insurance producers. - ANSWERSAgencies The transfer of some or all of the financial risk of loss from one insurer to another insurer or insurers is best described as: - ANSWERSReinsurance Travis owns his own insurance agency and sells and places business with 12 different insurers, each of which he represents by contract. Travis is a(n): - ANSWERSIndependent Agent All of the following are TRUE regarding agent/producer activities and responsibilities, except: - ANSWERSThey issue policies All of the following are true of insurance in general, except: - ANSWERSIt eliminates risk Being restored to the same financial situation or economic condition that existed prior to a loss and not profiting from an insurance transaction is considered: - ANSWERSIndemnification Which of the following is not an essential element of an insurable risk? - ANSWERSThe loss must be intentional A type of company that is owned by its policyholders, that traditionally issues participating policies in which policyholders may be eligible to receive dividends is a _______ company. - ANSWERSMutual Insurance If a life insurance applicant's answers on the application indicate that he/she is in good health, when in fact the applicant has a disease that he/she is not aware of, the statement on the application is considered: - ANSWERSA representation Which of the following would be considered legally competent to enter into a contract? - ANSWERSA 25-year-old self-employed person The insurable interest on one's own life is generally regarded as: - ANSWERSUnlimited ______ are primarily social organizations that engage in charitable and benevolent activities consisting of members of a given faith, lodge, or order, and are usually organized as non-profits. - ANSWERSFraternal Benefit Societies Under the law of large numbers, as the number of units in a group increases, the: - ANSWERSChance of predicting losses increases The three types of hazards are: - ANSWERSPhysical, moral, and morale An applicant inaccurately representing information on the application is most likely guilty of: - ANSWERSMisrepresentation Contract law pertains to the __________ and enforcement of contracts. - ANSWERSFormation of Larry owns an insurance contract issued by the ABC company that contains words and phrases that are ambiguous to Larry. If ABC challenges a claim based on these phrases they will lose because an insurance contract is deemed to be a contract of: - ANSWERSAdhesion Under the Fair Credit Reporting Act, which of the following statements is correct? - ANSWERSIf an individual is denied employment or coverage, they must be notified and can request a copy of the report from the reporting agency An aleatory contract - ANSWERSInvolves an exchange of value that is unequal Which of the following statements regarding an insurable risk is FALSE? - ANSWERSThe loss must cause an economic hardship on the insurer