WFG License Exam Q&A
Any situation that presents the possibility of a loss is known as - =a loss exposure
Making an insured whole by restoring them to the same condition as before a loss is an example
of - =the principle of indemnity
What is a requirement of a contract? - =there must be offer and acceptance of the contract terms
What are the benefits of insurance - =provides a source of investment funds
provides payment for the costs of covered losses
reduces the uncertainty created by many loss exposures
What is not a benefit of insurance - =Eliminates fraudulent losses
According to the California insurance Code, if an insurer's certificate of authority is revoked,
how can the Commissioner proceed - =online at the department of insurance website
confiscating office premises
liquidating the business
According to the California insurance Code, if an insurer's certificate of authority is revoked,
what CAN'T the Commissioner do - =using Guarantee Funds to pay salaries
Upon notification of a claim, a claimant must be given access to the California fair Claims
Settlement Practices resolution by all of the following means EXCEPT
a. On-line at the Department of insurance internet site.
b. By interview appointment with the agent of record.
c. A copy free of charge from the insurer.
d. Written notification from the insurer. - =By interview appointment by the agent of record
,All of the following would be considered unfair trade practices EXCEPT
a. Making a statement misrepresenting terms of any policy issued.
b. Committing any act of discrimination whether it be deemed fair or unfair.
c. Filing with any supervisor or other public official any false statement of financial condition of
an insurer.
d. Making a statement before the public about any person in the conduct of his insurance
business that is untrue. - =Committing any act of discrimination whether it be deemed fair or
unfair
Why is having a large number of similar exposure units important to insurers? - =The greater the
number insured, the more accurately the insurer can predict losses and set appropriate premiums
Loss retention is an effective risk management technique when all of the following conditions
exist EXCEPT the
a. Losses are highly predictable.
b. Probability of loss is unknown.
c. Worst possible loss is not serious.
d. Insured chooses to assume the losses involved. - =Probability of loss is unknown
The required contents of a policy include all of the following EXCEPT
a. Risks insured against.
b. Parties to the contract.
c. The probability of loss.
d. The period during which the insurance is to continue. - =the probability of loss
Risk can be defined as all of the following EXCEPT
a. Uncertainty.
b. The cause of loss.
c. The chance of loss.
,d. The probability of an unexpected outcome. - =the cause of loss
As authorized by the California insurance code, the insurance commissioner has provided
standards for names used by life insurance agents. Under these standards which, if any, of the
following are automatically acceptable for Mary Brown, a holder of the CLU designation? -
=Mary Brown Insurance Services
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the
principle of - =indemnity
A contract in which one party promises to indemnify another against loss that arises from an
unknown event is - =an insurance policy
The process by which an insurer decides whether to issue requested insurance is called -
=underwriting
All of the following statements about aleatory contracts are true EXCEPT
a. They may be interpreted as a form of gambling.
b. There are cases where the insurer pays nothing.
c. The insured and insurer contribute equally to the contract.
d. If a loss occurs, the insured's premium is small in relation to the amount the insurer pays. -
=the insured and the insurer contribute equally to the contract
As defined in the California insurance code, "insurance" is a - =contract
All of the occurrences listed below are examples of an insurable event as defined by the
California Insurance Code EXCEPT
a. A guest is injured by a fall from the insured's deck.
b. An insured suffers a financial loss in the state lottery.
c. An insured is sued for unintentional slander of another person.
, d. An insured is admitted to the hospital for delivery of a newborn. - =an insured suffers a
financial loss in the state lottery
A situation in which there is a possibility of loss or a gain is a - =speculative risk
Insurer policy expenses include all of the following EXCEPT
a. Taxes.
b. Premiums.
c. Agent commissions.
d. Home office operations. - =premiums
Which information is not required to be communicated in a life insurance contract? - =personal
judgement
Unintentional concealment entitles the injured party to which course of action, if any? -
=rescission of the contract
All of the following are characteristics of reinsurance EXCEPT it
a. Increases underwriting capacity.
b. Stabilizes an insurer's profits.
c. Increases the unearned premium reserve.
d. Provides protection against a catastrophic loss. - =increases the unearned premium reserve
What is the goal of the underwriting process? - =To avoid selecting a disproportionate number of
bad risks
What is the definition of premium? - =Money an insured pays an insurer to obtain the benefits
provided in the policy
The direct response distribution of insurance utilizes all of the following to promote the sale of
Any situation that presents the possibility of a loss is known as - =a loss exposure
Making an insured whole by restoring them to the same condition as before a loss is an example
of - =the principle of indemnity
What is a requirement of a contract? - =there must be offer and acceptance of the contract terms
What are the benefits of insurance - =provides a source of investment funds
provides payment for the costs of covered losses
reduces the uncertainty created by many loss exposures
What is not a benefit of insurance - =Eliminates fraudulent losses
According to the California insurance Code, if an insurer's certificate of authority is revoked,
how can the Commissioner proceed - =online at the department of insurance website
confiscating office premises
liquidating the business
According to the California insurance Code, if an insurer's certificate of authority is revoked,
what CAN'T the Commissioner do - =using Guarantee Funds to pay salaries
Upon notification of a claim, a claimant must be given access to the California fair Claims
Settlement Practices resolution by all of the following means EXCEPT
a. On-line at the Department of insurance internet site.
b. By interview appointment with the agent of record.
c. A copy free of charge from the insurer.
d. Written notification from the insurer. - =By interview appointment by the agent of record
,All of the following would be considered unfair trade practices EXCEPT
a. Making a statement misrepresenting terms of any policy issued.
b. Committing any act of discrimination whether it be deemed fair or unfair.
c. Filing with any supervisor or other public official any false statement of financial condition of
an insurer.
d. Making a statement before the public about any person in the conduct of his insurance
business that is untrue. - =Committing any act of discrimination whether it be deemed fair or
unfair
Why is having a large number of similar exposure units important to insurers? - =The greater the
number insured, the more accurately the insurer can predict losses and set appropriate premiums
Loss retention is an effective risk management technique when all of the following conditions
exist EXCEPT the
a. Losses are highly predictable.
b. Probability of loss is unknown.
c. Worst possible loss is not serious.
d. Insured chooses to assume the losses involved. - =Probability of loss is unknown
The required contents of a policy include all of the following EXCEPT
a. Risks insured against.
b. Parties to the contract.
c. The probability of loss.
d. The period during which the insurance is to continue. - =the probability of loss
Risk can be defined as all of the following EXCEPT
a. Uncertainty.
b. The cause of loss.
c. The chance of loss.
,d. The probability of an unexpected outcome. - =the cause of loss
As authorized by the California insurance code, the insurance commissioner has provided
standards for names used by life insurance agents. Under these standards which, if any, of the
following are automatically acceptable for Mary Brown, a holder of the CLU designation? -
=Mary Brown Insurance Services
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the
principle of - =indemnity
A contract in which one party promises to indemnify another against loss that arises from an
unknown event is - =an insurance policy
The process by which an insurer decides whether to issue requested insurance is called -
=underwriting
All of the following statements about aleatory contracts are true EXCEPT
a. They may be interpreted as a form of gambling.
b. There are cases where the insurer pays nothing.
c. The insured and insurer contribute equally to the contract.
d. If a loss occurs, the insured's premium is small in relation to the amount the insurer pays. -
=the insured and the insurer contribute equally to the contract
As defined in the California insurance code, "insurance" is a - =contract
All of the occurrences listed below are examples of an insurable event as defined by the
California Insurance Code EXCEPT
a. A guest is injured by a fall from the insured's deck.
b. An insured suffers a financial loss in the state lottery.
c. An insured is sued for unintentional slander of another person.
, d. An insured is admitted to the hospital for delivery of a newborn. - =an insured suffers a
financial loss in the state lottery
A situation in which there is a possibility of loss or a gain is a - =speculative risk
Insurer policy expenses include all of the following EXCEPT
a. Taxes.
b. Premiums.
c. Agent commissions.
d. Home office operations. - =premiums
Which information is not required to be communicated in a life insurance contract? - =personal
judgement
Unintentional concealment entitles the injured party to which course of action, if any? -
=rescission of the contract
All of the following are characteristics of reinsurance EXCEPT it
a. Increases underwriting capacity.
b. Stabilizes an insurer's profits.
c. Increases the unearned premium reserve.
d. Provides protection against a catastrophic loss. - =increases the unearned premium reserve
What is the goal of the underwriting process? - =To avoid selecting a disproportionate number of
bad risks
What is the definition of premium? - =Money an insured pays an insurer to obtain the benefits
provided in the policy
The direct response distribution of insurance utilizes all of the following to promote the sale of
