Life, Accident and Health
Insurance Exam
- If only one party to an insurance contract has made a legally enforceable promise,
what kind of contract is it?
A. Conditional
B. A legal, but unethical contract
C. Unilateral
D. Adhesion - Which services are associated with Standard & Poor’s and AM Best?
A. Investigating violation of The Fair Credit Reporting Act
B. Providing employment histories for investigative consumer reports
C. Storing medical information collected by insurance companies
D. Rating the financial strength of insurance companies - Which insurance principle states that if a policy allows for greater compensation than
the financial loss incurred, the insured may only receive benefits for the amount lost?
A. Consideration
B. Indemnity
C. Stop-loss
D. Limited Benefits - If an insurer meets the state’s finical requirements and is approved to transact
business in the state, it is considered to be..
A. Domestic
B. Authorized
C. Qualified
D. Certified - Which of the following is an example of apparent authority?
A. The agent puts up a sign with the logo of the insurance company without express
permission
B. The agent accepts a premium payment after the end of the grace period
C. The agent accepts a premium during the grace period
D. The agent has business cards and stationery printed
- Which statement regarding insurable risks is NOT correct?
A. Insurance cannot be mandatory
B. The insurable risk needs to be statistically predictable
C. Losses must be measurable
D. Insureds cannot be randomly selected - All of the following are examples of risk retention EXCEPT…
A. Deductibles
B. Copayments
C. Self-insurance
D. Premiums - Because an insurance policy is a legal contract, it must conform to the laws
governing contracts which require all of the following elements EXCEPT…
A. Offer and acceptance
B. Conditions
C. Legal purpose
D. Consideration - In insurance transactions, fiduciary responsibility means…
A. Commingling premiums with agent’s personal funds
B. Handling insurer’s funds in a trust capacity
C. Maintaining a good credit record
D. Being liable with respect to payment of claims - Which of the following types of insurers issues participating policies?
A. A fraternal insurer
B. A stock insurer
C. A mutual insurer
D. An authorized insurer
- Which of the following is the foundation of the statistical prediction of loss upon
which rates for insurance are calculated?
A. Law of averages
B. Law of large numbers
C. Adverse selection
D. Field underwriting - The authority granted to an agent through the agent’ contract is referred to as…
A. Apparent authority
B. Implied authority
C. Absolute authority
D. Express authority - Which of the following is NOT consideration not he part of an insured?
A. Premium payment
B. Promise to submit timely claims
C. Representations on the application
D. Submitting a Statement of Good Health - Events or conditions that increase the chances of an insured loss occurring are
referred to as…
A. Risks
B. Perils
C. Hazards
D. Exposures - Events in which the principal has both the chance of winning or losing are classified
as…
A. Retained risk
B. Speculative risk