PA Life, Accident, & Health Insurance
Exam-Graded A
Insurance - correct Answer-defined as the transfer of PURE risk to the insurance
company in consideration for a premium.
The chance of loss without any chance of gain is called - correct Answer-pure risk
Speculative risk - correct Answer-has the possibility for gain or loss and is not insurable.
Risk is defined as the - correct Answer-chance of loss.
A condition that could result in a loss is known as an - correct Answer-exposure
A hazard is something that increases - correct Answer-the chance of loss.
The presence of a physical hazard - correct Answer-increases the chance of a loss
occurring.
A peril is - correct Answer-defined as a cause of loss, such as fire.
To be insurable, - correct Answer-losses must be calculable.
The law of large numbers - correct Answer-allows insurers to predict claims more
accurately.
The law of large numbers applies to - correct Answer-groups of people, not to
individuals.
The more people in the group, - correct Answer-the more accurate the predictions are.
Most insurers buy reinsurance - correct Answer-to protect themselves in the event of a
catastrophic loss.
Insurance laws are not required - correct Answer-to be uniform from one state to
another.
A stock insurer - correct Answer-may pay dividends to its shareholders (stockholders),
but they may not be guaranteed.
A reciprocal insurance company is managed by an - correct Answer-attorney-in-fact.
, An unincorporated association of individuals who insure each other is known as -
correct Answer-a reciprocal insurer.
The government offers insurance primarily based upon - correct Answer-social needs,
such as flood insurance and workers compensation, but does not offer insurance for the
purpose of preventing fraud.
A foreign company - correct Answer-has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - correct Answer-an
alien company.
A producer may be personally liable when - correct Answer-violating the producer's
contract.
Producers represent - correct Answer-the insurance company, not the insured.
Independent producers - correct Answer-own their own accounts and are not insurance
company employees.
Producers have - correct Answer-express, implied and apparent authority.
The authority a producer - correct Answer-has that is written in his or her contract is
known as express authority.
A producer's binding authority (if any) - correct Answer-is expressed (written down) in
the producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - correct Answer-but is actual authority the
producer has to transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - correct Answer-by the acronym
C-O-A-L (consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - correct Answer-is offer and acceptance, or mutual
agreement.
Advertising the availability of insurance is not - correct Answer-considered to be an
offer.
A specific and definite proposal to enter into a contract is known as - correct Answer-an
offer.
The consideration on a policy need - correct Answer-not be equal.
Exam-Graded A
Insurance - correct Answer-defined as the transfer of PURE risk to the insurance
company in consideration for a premium.
The chance of loss without any chance of gain is called - correct Answer-pure risk
Speculative risk - correct Answer-has the possibility for gain or loss and is not insurable.
Risk is defined as the - correct Answer-chance of loss.
A condition that could result in a loss is known as an - correct Answer-exposure
A hazard is something that increases - correct Answer-the chance of loss.
The presence of a physical hazard - correct Answer-increases the chance of a loss
occurring.
A peril is - correct Answer-defined as a cause of loss, such as fire.
To be insurable, - correct Answer-losses must be calculable.
The law of large numbers - correct Answer-allows insurers to predict claims more
accurately.
The law of large numbers applies to - correct Answer-groups of people, not to
individuals.
The more people in the group, - correct Answer-the more accurate the predictions are.
Most insurers buy reinsurance - correct Answer-to protect themselves in the event of a
catastrophic loss.
Insurance laws are not required - correct Answer-to be uniform from one state to
another.
A stock insurer - correct Answer-may pay dividends to its shareholders (stockholders),
but they may not be guaranteed.
A reciprocal insurance company is managed by an - correct Answer-attorney-in-fact.
, An unincorporated association of individuals who insure each other is known as -
correct Answer-a reciprocal insurer.
The government offers insurance primarily based upon - correct Answer-social needs,
such as flood insurance and workers compensation, but does not offer insurance for the
purpose of preventing fraud.
A foreign company - correct Answer-has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - correct Answer-an
alien company.
A producer may be personally liable when - correct Answer-violating the producer's
contract.
Producers represent - correct Answer-the insurance company, not the insured.
Independent producers - correct Answer-own their own accounts and are not insurance
company employees.
Producers have - correct Answer-express, implied and apparent authority.
The authority a producer - correct Answer-has that is written in his or her contract is
known as express authority.
A producer's binding authority (if any) - correct Answer-is expressed (written down) in
the producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - correct Answer-but is actual authority the
producer has to transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - correct Answer-by the acronym
C-O-A-L (consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - correct Answer-is offer and acceptance, or mutual
agreement.
Advertising the availability of insurance is not - correct Answer-considered to be an
offer.
A specific and definite proposal to enter into a contract is known as - correct Answer-an
offer.
The consideration on a policy need - correct Answer-not be equal.
