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A comprehensive overview of key concepts in life and health insurance, focusing on the application process, underwriting, and policy delivery. It includes multiple-choice questions and answers covering topics such as insurable interest, risk, hazards, types of insurers, and the role of agents. This resource is valuable for students and professionals seeking to understand the fundamentals of life and health insurance.
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What two elements are necessary to a life insurance contract to have a legal purpose? ✔✔1. Insurable Interest
Insurance is a contract that protects the insured from what? ✔✔Loss
What Type of Risk is Insurable? ✔✔Pure
What is the term for the causes of loss insured against in a insurance policy? ✔✔Peril
What Law Protects Consumers from the circulation of inaccurate or obsolete information? ✔✔The Fair Credit Reporting Act
What are the three types of hazards? ✔✔1. Physical
In forming an insurance contract, when does an acceptance usually occur? ✔✔When the insurer approves a prepaid application
An insurance company domiciled in California and transacts insurance in Nevada. What is this insurer's classification in Nevada? ✔✔Foreign
A state-issued document empowering an insurance company to become an admitted insurer is called what? ✔✔Certificate of Authority
What entities make up the Medical Information Bureau? ✔✔Insurers
What type of insurer is a voluntarily formed organization that provides insurance benefits for members of an affiliated lodge or religious organization with representative form of governtment? ✔✔Fraternal Insurers
What insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy? ✔✔Mutual
In insurance, when is the offer usually made on a contract? ✔✔When insurance application is submitted.
The type of insurance company organized to return any surplus money to its policyholders is known as what? ✔✔Mutual Company
What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated? ✔✔Law of large numbers
When does an insurance policy go into effect? ✔✔When the policy is delivered and the premium is paid?
For the purpose of the insurance, what is risk? ✔✔Uncertainty of Loss
What is the name of the process that insurance companies use to determine whether or now an application is insured? ✔✔Underwriting
The person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard? ✔✔Morale
According to Law of Agency, a principal is represented by whom? ✔✔Agent or Producer
What are the five characteristics of an ideally insurable risk? ✔✔Loss Must Be
Whom doe an insurance agent represent? ✔✔Insurance Company
The insurer organized to return a profit to the stockholders is what of insurer? ✔✔Stock Company
The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what? ✔✔Loss
When a change needs to be made on the application for insurance, which is the best method of correcting the information? ✔✔Complete a new application or ask the applicant to initial the correction on the original application.
What are the strategies used by underwriters to prevent adverse selection? ✔✔Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate.
What type of insurer is formed under the law of another country? ✔✔Alien
If an applicant does not receive his or her insurance policy, who would be held responsible? ✔✔The agent
Who owns stick companies? ✔✔Stockholders
What are the four elements of an insurance contract? ✔✔Agreement (offer and acceptance), consideration, competent parties, and legal purpose.
What are the three types of agent authority? ✔✔Express, Implied, and Apparent
When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what? ✔✔Adverse Selection
Insurers are classified according to their domicile. What are the three types of insurers? ✔✔Domestic, foreign, and alien.
In order to transact insurance within a given state, an alien insurer must first obtain what? ✔✔Certificate of Authority
Wagering on a sporting event is known as what type of risk? ✔✔Speculative
An insurance company that is formed under the laws of another state is known as what type of insurer? ✔✔Foreign