financial test 2
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
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| show | Provide a solution for economic uncertainty and loss
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| show | Fair Credit Reporting Act
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| Which of the following statements is correct when comparing participating policies with non-participating policies? | show 🗑
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| The State Guaranty Association guarantees | show 🗑
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| show | Independent agency, Personal producing general agency, Career agency
Not Direct selling
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| show | paid to the policyowners
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| show | share in any company earnings and receive a dividend
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| show | Insurance contract
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| show | dividends
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| show | Reduces the uncertainty of loss exposures, Makes a loss whole again, Source of investment funds
Not Losses due to fraud are eliminated
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| All of the following are systems that support the sale of insurance through agents and brokers | show 🗑
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| show | a participating company
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| show | Broker
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| show | Buyer's guide and policy summary
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| show | Mutual insurance companies are "owned" by their policyowners, Stock insurance companies seek a profit for their shareholders, Fraternal benefit societies must be nonprofit organizations.
Not Reinsurers usually deal with group policyowners.
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| Mutual insurers pay dividends to participating policyowners if the insurer has which of the following? | show 🗑
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| Which of the following is a commercial insurer | show 🗑
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| show | Participating
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| show | Policyholders
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| show | Lloyds of London
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| Which entity has as one of its objectives preserving state regulation of insurance? | show 🗑
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| Explain the difference between what a general agent does as compared to a PPGA? | show 🗑
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| Which of the following is a type of insurance where an insurer transfers loss exposures from policies written for its insureds? | show 🗑
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| show | Mutual Insurer
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| Companies that sell more than one type of insurance are | show 🗑
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| show | Independent agent
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| What is a participating life insurance policy? | show 🗑
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| show | 1970 - Fair Credit Reporting Act
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| The major difference between participating and nonparticipating policies is the | show 🗑
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| show | To replace the uncertainty of risk with guarantees
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| What is defined as uncertainty regarding loss? | show 🗑
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| Purchasing disability insurance best represents which treatment of risk? | show 🗑
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| An accident is classified as which of the following? | show 🗑
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| show | Law of large numbers
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| show | Risk is eliminated
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| Moral hazard is described as the | show 🗑
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| show | Only pure risks are insurable.
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| All of the following situations must exist for a risk to be insurable EXCEPT a | show 🗑
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| show | Peril
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| show | pure risk
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| show | Speculative risk
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| show | Speculative risk
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| show | loss due to chances, definite and measurable loss, predictable loss
Not catastrophic loss
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| show | Retention
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| Which of the following refers to a condition that may increase the chance of a loss? | show 🗑
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| Which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time? | show 🗑
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| show | The loss must be definite and measurable, The loss cannot be catastrophic, The loss exposures to be insured must be large
Not The loss must not be due to chance.
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| show | Mortality rate
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| Which of the following is considered to be a situation that has the potential for loss? | show 🗑
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| All of the following actions are examples of risk avoidance | show 🗑
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| show | Human Life Value Approach
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| show | loss sharing
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| show | An insurable event that takes place which results in a payment made by the insurance company, Unintentional decrease in the value of an asset due to a peril, The amount an insurance company must pay because of an insurable event
Not Probability event
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| Which of the following best describes the function of insurance? | show 🗑
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| show | reduction
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| All of the following circumstances must be met for loss retention to be an effective risk management technique | show 🗑
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| Which risk involves the chance of both loss and gain? | show 🗑
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| show | The potential for loss, Exposure to danger, Uncertainty
Not The cause of a loss
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| Buying insurance is one of the most effective ways of | show 🗑
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| Which of the following describes the statement "The more times an event is repeated, the more predictable the outcome becomes"? | show 🗑
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| The owner of a camera store is worried that her new employees may help themselves to items from inventory without paying for them. What kind of hazard is described? | show 🗑
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| Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies? | show 🗑
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| Individual tendencies that arise from an attitude or state of mind, causing indifference to loss is what kind of hazard? | show 🗑
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| Which of the following is an element of an insurable risk? | show 🗑
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| show | a peril
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| show | Loss only
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| Restoring an insured to the same condition as before a loss is known as | show 🗑
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| show | uncertainty regarding financial loss.
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| Carl buys his wife Mary a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box at a local bank. This is an example of risk | show 🗑
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| Which of these statements correctly describes risk? | show 🗑
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| An insurer is considered authorized if it | show 🗑
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| show | At the time of application
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| show | Parties involved must be competent, Contract must have a legal purpose, Offer and acceptance must be involved
Not Equal consideration is required between the involved parties
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| show | Application and initial premium
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| show | Insurable interest exists when the applicant is the insured. The applicant must be subject to loss death, illness,or disability of insured. The person be insured must give consent before a policy is issued, even if the applicant has an insurable interest.
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| Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? | show 🗑
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| The authority given by an insurer or employer to a licensee to transact insurance or adjust claims on their behalf is called | show 🗑
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| show | Unilateral, Aleatory, Adhesion
Not Bilateral
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| show | Broker
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| show | The insurance contract is a contract of adhesion.
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| show | Waiver
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| show | only one party (the insurer) makes any kind of legally enforceable promise
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| show | conditional, aleatory, unilateral
Not estoppel
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| Which of the following contracts is defined as "one that restores an injured party to the condition that was present before the loss"? | show 🗑
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| show | Parties involved in the contract, Period to which the coverage exists, Risk insured against
Not Probability of loss
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| Which of the following statements about authority is NOT correct? | show 🗑
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| Which of the following statements correctly describes a contract of indemnity? | show 🗑
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| show | solicit applications for insurance, collect premiums from policyowners, render services to prospects
Not authorize payment of certain claims
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| show | Aleatory
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| All are competent parties who can enter into insurance contracts | show 🗑
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| show | an offer and acceptance of the contract terms
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| show | The application is submitted
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| Which is considered a statement made by an applicant that he/she believes to be true? | show 🗑
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| An insurance company has how many years to challenge the validity of a life insurance contract? | show 🗑
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| show | At the inception of the policy
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| show | The policyowner must expect to suffer a loss when the insured dies or becomes disabled.
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| show | a contract of adhesion
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| show | Conditional
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| The following are all characteristics of insurance contracts | show 🗑
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| A life insurance policy would be considered a wagering contract WITHOUT | show 🗑
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| show | Insurer
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| When an agent is provided the materials from his/her company, which category of authority is the one which allows those items to be used? | show 🗑
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| show | Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties.
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| show | Indemnity
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| The authority of an agent which is spelled out in the written words of the agency contract between the agent and the insurer is called | show 🗑
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| Which of the following statements describes the parol evidence rule? | show 🗑
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| Krissa and Janet enter into a contract in which Krissa agrees to fraudulently induce sick people to sell their insurance contracts to Janet's company. Krissa and Janet's contract can best be described as | show 🗑
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| An agreement without legal effect is | show 🗑
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| Which statement is CORRECT when describing a contract of adhesion? | show 🗑
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| Which characteristic of an insurance contract means there is a potential for unequal exchange of value for both parties | show 🗑
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| show | minors, the mentally infirm, those under the influence of drugs or alcohol
Not the disabled
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| The authority that an insurer gives to its agent by means of the agent's contract is known as | show 🗑
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| The importance of a representation is demonstrated in what rule? | show 🗑
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| show | Life and securities
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| The cash values of life insurance policies belong to which of the following? | show 🗑
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| How is a family plan life insurance policy normally structured? | show 🗑
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| show | joint life
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| show | variable life
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| What type of life insurance is known for small face values with premiums collected weekly or monthly by an agent at the policyowners home? | show 🗑
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| A universal life policyowner may do all of the following | show 🗑
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| show | Graded, Substandard, Noncancelable
Not Non-medical
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| What feature best describes universal life insurance? | show 🗑
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| Credit life insurance would provide coverage for a loss caused by | show 🗑
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| show | death benefits
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| show | convert their term policy to a whole life policy without evidence of insurability.
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| When level premium insurance is renewed, the premium amount rises to reflect the increased mortality risk of the insured's older age. What phrase best describes this approach to increasing premiums? | show 🗑
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| In a universal life policy, all of the following are tax-free. | show 🗑
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| show | As the premium payment period shortens
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| show | the policy provides a straight, level $100,000 of coverage for 5 years. If the insured dies at any time during the 5 years, his beneficiary will receive the policy's face value. if the insured lives beyond the 5 years, no benefits are payable.
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| Which of the following is true regarding a family policy that covers children? | show 🗑
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| A life insurance policy's limit of liability would be | show 🗑
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| show | Modified whole life
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| Why was variable life insurance created? | show 🗑
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| All of the following statements about variable insurance policies are correct | show 🗑
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| show | a 3-year renewable policy allows a term policyowner to renew the same coverage for another 3 years. an option to convert provides that a term life insurance policy can be exchanged for a permanent one.
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| show | the owner of a 30-pay life policy will owe no more premiums after the 30th year the policy is in force. a single-premium life policy is purchased with a large one-time only premium.
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| show | Limited pay life policy
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| show | 10%
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| Bryce purchased a $100,000 Joint Life policy that covered his life as well as his wife's. He died 3 years later in an airplane accident. How much of a death benefit will his wife receive? | show 🗑
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| show | 20-year endowment
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| show | Child coverage is convertible to permanent insurance, Child coverage comes in the form of term insurance, Children are covered up to an age stated in the policy
Not Only children born prior to policy's issue date may be included
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| An insurance policy written after 1988 that fails to pass the seven-pay test is known as | show 🗑
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| All of the following statements about term insurance are correct | show 🗑
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| show | Flexible premium and adjustable death benefit
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| show | Whole life insurance is designed to mature at age 100.
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| show | Quicker processing of life insurance application, Less cost involved with underwriting the application, Demand on the medical profession reduced
Not Applicants are not required to answer medical questions on the application
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| show | 10%
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| Adjustable life policies combine the following into a single plan | show 🗑
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| show | The premium for the renewal period will be higher than the initial period.
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| show | It provides a guaranteed minimum death benefit.
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| show | Adjustable life
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| Which type of life coverage does provide both living and death benefits | show 🗑
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| show | Increasing term
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| show | Level term
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| show | Universal life
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| show | Decreasing term
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| In a renewable term life insurance policy, the contract will usually | show 🗑
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| Insurers generally offer all of the following forms of term insurance EXCEPT | show 🗑
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| Which form of life insurance would be purchased for a specific period and then expire without value? | show 🗑
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| Bo's bank approves him for a 100K loan to start a new business. What type of insurance will his bank require him to have? | show 🗑
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| show | Second-to-die policy
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| show | A minimum death benefit is guaranteed, Cash values fluctuate and are not guaranteed, Death benefits fluctuate over the minimum
Not Nonforfeiture amounts are guaranteed
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| The principal advantage of term policies being converted to permanent life insurance is that | show 🗑
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| Increasing term insurance death benefits increase by | show 🗑
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| show | Decreasing term
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| show | Cash values are not guaranteed.
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| show | Modified premium, ordinary life, single premium
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| show | To avoid being classified as an MEC, a life insurance policy must satisfy the '7-pay test.' The "7-pay test
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| show | endowment insurance
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| An universal life insurance policy has all the following | show 🗑
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