,What type of reinsurance contract involves two companies automatically sharing their
risk exposure? - CORRECT ANSWERS-treaty
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a - CORRECT ANSWERS-risk retention group
What is the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? - CORRECT ANSWERS-Fair Credit
Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called: - CORRECT ANSWERS-
reserves
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: - CORRECT ANSWERS-fraternal benefit
society
If a contract of adhesion contains questionable language, to whom would the
interpretation be in favor of? - CORRECT ANSWERS-insured
What is a warranty? - CORRECT ANSWERS-is a statement guaranteed to be true
A policy of adhesion can only be modified by whom? - CORRECT ANSWERS-
insurance company
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of
the following contractual elements? - CORRECT ANSWERS-Legal Purpose (Insurable
Interest)
Which of these is considered a statement that is assured to be true in every respect? -
CORRECT ANSWERS-warranty
Which of these is NOT a type of agent authority? - CORRECT ANSWERS-principal
The Consideration clause of an insurance contract includes: - CORRECT ANSWERS-
the schedule and amount of premium payments
What is the consideration given by an insurer in the Consideration clause of the life
policy? - CORRECT ANSWERS-Promise to pay a death benefit to a named beneficiary
Who makes the legally enforceable promises in a unilateral insurance policy? -
CORRECT ANSWERS-insurance company
, All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: - CORRECT ANSWERS-bilateral
At what point does an informal contact become binding? - CORRECT ANSWERS-When
one party makes an offer and the other party accepts that offer.
Which of these arrangements allows one to bypass insurable interest laws? -
CORRECT ANSWERS-Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of - CORRECT ANSWERS-fiduciary responsibility
Life and health insurance policies are: - CORRECT ANSWERS-unilateral contracts
What type of life insurance gives the greatest amount of coverage for a limited period of
time? - CORRECT ANSWERS-Term life
Which type of life policy contains a monthly mortality charge as well as self-directed
investment choices? - CORRECT ANSWERS-Variable Universal Life
T has a term policy that allows him to continue the coverage after expiration of the initial
policy period. What type of term coverage is this? - CORRECT ANSWERS-renewable
Which of the following policies is characterized by a flexible premium and death benefit
and allows the policyowner control of the investment aspect of the plan? - CORRECT
ANSWERS-Variable universal life
D needs life insurance that provides coverage for only a limited amount of time while
also paying the lowest possible premium. What kind of policy is needed? - CORRECT
ANSWERS-Level term
A policy that becomes a Modified Endowment Contract (MEC) - CORRECT ANSWERS-
will lose many of its tax advantages
Term insurance has which of the following characteristics? - CORRECT ANSWERS-
Expires at the end of the policy period
What type of life policy covers two people and pays upon death of the last insured? -
CORRECT ANSWERS-survivorship
A father who dies within 3 years after purchasing a life insurance policy on his infant
daughter can have the policy premiums waived under which provision? - CORRECT
ANSWERS-Payor provision
risk exposure? - CORRECT ANSWERS-treaty
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a - CORRECT ANSWERS-risk retention group
What is the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? - CORRECT ANSWERS-Fair Credit
Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called: - CORRECT ANSWERS-
reserves
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: - CORRECT ANSWERS-fraternal benefit
society
If a contract of adhesion contains questionable language, to whom would the
interpretation be in favor of? - CORRECT ANSWERS-insured
What is a warranty? - CORRECT ANSWERS-is a statement guaranteed to be true
A policy of adhesion can only be modified by whom? - CORRECT ANSWERS-
insurance company
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of
the following contractual elements? - CORRECT ANSWERS-Legal Purpose (Insurable
Interest)
Which of these is considered a statement that is assured to be true in every respect? -
CORRECT ANSWERS-warranty
Which of these is NOT a type of agent authority? - CORRECT ANSWERS-principal
The Consideration clause of an insurance contract includes: - CORRECT ANSWERS-
the schedule and amount of premium payments
What is the consideration given by an insurer in the Consideration clause of the life
policy? - CORRECT ANSWERS-Promise to pay a death benefit to a named beneficiary
Who makes the legally enforceable promises in a unilateral insurance policy? -
CORRECT ANSWERS-insurance company
, All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: - CORRECT ANSWERS-bilateral
At what point does an informal contact become binding? - CORRECT ANSWERS-When
one party makes an offer and the other party accepts that offer.
Which of these arrangements allows one to bypass insurable interest laws? -
CORRECT ANSWERS-Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of - CORRECT ANSWERS-fiduciary responsibility
Life and health insurance policies are: - CORRECT ANSWERS-unilateral contracts
What type of life insurance gives the greatest amount of coverage for a limited period of
time? - CORRECT ANSWERS-Term life
Which type of life policy contains a monthly mortality charge as well as self-directed
investment choices? - CORRECT ANSWERS-Variable Universal Life
T has a term policy that allows him to continue the coverage after expiration of the initial
policy period. What type of term coverage is this? - CORRECT ANSWERS-renewable
Which of the following policies is characterized by a flexible premium and death benefit
and allows the policyowner control of the investment aspect of the plan? - CORRECT
ANSWERS-Variable universal life
D needs life insurance that provides coverage for only a limited amount of time while
also paying the lowest possible premium. What kind of policy is needed? - CORRECT
ANSWERS-Level term
A policy that becomes a Modified Endowment Contract (MEC) - CORRECT ANSWERS-
will lose many of its tax advantages
Term insurance has which of the following characteristics? - CORRECT ANSWERS-
Expires at the end of the policy period
What type of life policy covers two people and pays upon death of the last insured? -
CORRECT ANSWERS-survivorship
A father who dies within 3 years after purchasing a life insurance policy on his infant
daughter can have the policy premiums waived under which provision? - CORRECT
ANSWERS-Payor provision
