UTAH HEALTH INSURANCE EXAM EXAM QUESTIONS WITH CORRECT VERIFIED ANSWERS | 100% PASS (A+ CERTIFIED)

UTAH HEALTH INSURANCE EXAM EXAM QUESTIONS WITH CORRECT VERIFIED ANSWERS | 100% PASS (A+ CERTIFIED) Insurance Answer Transfer of risk. Types of risk Answer Pure and Speculative Pure Risk Answer A chance of loss or no loss, but no chance of gain. The ONLY type of insurable risk. Speculative Risk Answer Chance of loss or gain. CANNOT be insured. (Example: Buying stock in the stock market) Types of Hazards Answer Physical, Moral and Morale Physical Hazard Answer A physical condition that increases the chance of loss. Moral Hazard Answer Dishonesty or character defects in an individual that increase the frequency or severity of loss (Example: Applicant lies on insurance application) Morale Hazard Answer Through carlessness or irresponsible actions an increase in the possibilty of a loss. (Example: Not cutting down a tree branch that might fall on your house because you have insurance if it does) Perils Answer causes of loss insured against in an insurance policy Avoidance Answer Eliminating exposure to a loss (not driving so you won't get in a car accident) retention Answer Planned assumption of risk through the use of deductibles, co payments, or self-insurance. reduction Answer Actions such as installing smoke detectors to reduce the risk of loss from fire or getting an annual physical to help prevent/detect health problems early. Transfer Answer Transferring the risk of loss to another company or entity. Insurance is the most common way to transfer risk. To be insurable, a risk must be Answer -due to chance -Definite and measurable -Statistically predictable -NOT catastrophic -Large loss exposure (large pool of randomly selected people/risks) Adverse Selection Answer Tendency for poorer than average risks to seek insurance. Reinsurance Answer Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability. Ceding Insurer Answer The company transferring risk in a reinsurance arrangement. assuming insurer Answer reinsurer or company who is taking over the risk Stock Companies Answer -Owned by stockholders -nonparticipating (policy holders DO NOT share in profits or losses) Mutual Companies Answer -Owned by the policyowners -Participating (ploicyowners are entitled to dividends) -Dividends are NOT guaranteed Fraternal Benefit Societies Answer Must be nonprofit, have a lodge system (ie. religious organization), representative form of government and offer insurance to its members only. Certificate of Authority Answer License for insurance company to do business. This allows insurers to be considered ADMITTED or AUTHORIZED. Domestic Insurer Answer An insurance company that conducts business in the state of incorporation. Foreign Insurer Answer An insurance company that is incorporated in another state. Alien Insurer Answer An insurance company that is incorporated outside the United States. Who does an agent represent? Answer The INSURER (insurance company) not the insured. Express Authority Answer The authority granted to an agent by means of the agent's written contract.. Implied Authority Answer the authority that the agent has that is not specifically listed in their contract, but is assumed to have to conduct business. (Required to be able to conduct business). Example: collecting premiums Apparent Authority Answer A third party's reasonable belief that an agent has authority to act on the principal's behalf. Based on the actions words, etc of the principal. Example: Using business cards or brochures Fiduciary Responsibility Answer -An ethical and legal obligation to perform a person's duties in a trustworthy manner. -Money related -Must not commingle funds -Forwarding premiums to the insurer/principal in a timely manner is an example of acting in a fiduciary capacity Parts of a contract Answer Offer, acceptance, consideration, and legal purpose Consideration Answer Exchanging something of value Insured's Consideration Answer 1. A truthful and complete application 2. Premium Payment Insurer's Consideration Answer Promise to pay qualifying claims Acceptance Answer UNDERWRITER approves a prepaid application. (An agent/producer CANNOT bind coverage, but they can accept an application) Legal Purpose Answer Insurable interest and consent 1. Must be of age (18+) 2. Cannot be high 3. Cannot be drunk 4. Must be mentall competent Contract of Adhesion Answer Take it or leave it agreements, where the insured has no say in the contract terms and conditions. Aleatory Contract Answer A contract where the values exchanged may not be equal but depend on an uncertain event