Life and Health Insurance Exam 1 Complete Questions And Answers Well Elaborated

UNIT 1: The term used to describe the individual who is covered by the insurance is A. insurer B. insured C. policyowner D. risk - Correct AnswersB Which of the following is a risk? A. A car may need to have new brakes installed after several years of regular driving. B. An individual may need medical attention after slipping on the ice and falling. C. Both are examples of risk. D. Neither is an example of risk. - Correct AnswersB The estimation of future losses is more accurate when information is from A. a small select group B. a large group C. a medium-sized group D. any size group; group size does not matter - Correct AnswersA The application of the law of large numbers enables insurers to A. estimate the future losses of a class or group of people B. predict the future losses of speci c individuals C. charge higher premiums for insurance D. calculate mortality charges - Correct AnswersB Which type of policy is designed to protect against the risk of living too long? A. Casualty B. Life C. Annuity D. Medical expense - Correct AnswersC Which of the following is a type of insurance company owned by its shareholders? A. Mutual B. Stock C. Lloyd's D. Reinsurer - Correct AnswersB The ZYX Insurance Company is incorporated in Alabama. While doing business in Texas, it is A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - Correct AnswersB The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas, it is A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - Correct AnswersC Self-insurance is an example of which method of handling risk? A. Acceptance B. Transference C. Avoidance D. Reduction - Correct AnswersA Which of the following terms is used to denote insurance companies? A. Broker B. Exchange C. Corporation D. Insurer - Correct AnswersD A social device for spreading the chance of financial loss among a large number of people is the definition of A. hazard B. risk C. insurance D. peril - Correct AnswersC Which of the following risks is most likely to be insurable? A. George is concerned about the financial impact his premature death would have on his family. B. Talyn is concerned about the financial impact large betting losses at the horse track will have on his retirement savings. C. John is concerned about the financial impact on his savings when his car eventually becomes worn enough to need to be replaced. D. Jewel is concerned about the nancial effect losing her hat would have on her weekly spending money. - Correct AnswersA Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash by A. reduction B. avoidance C. transference D. retention - Correct AnswersB Chianna becomes injured in a car accident caused when she took her eyes off the road to answer her cell phone. This is an example of A. a physical hazard B. a moral hazard C. a morale hazard D. a legal hazard - Correct AnswersC An arrangement in which an insurer transfers part of the insurance risk to another insurance company is known as A. avoidance B. fraud C. Lloyd's associations D. reinsurance - Correct AnswersD Which of the following is NOT an example of insurable interest? A. Jose wishes to take out a life insurance policy on his own life to provide for his family in the event of his death. B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral costs will be covered when the time comes. C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a careless driver and Juan thinks his neighbor is likely to die in a car accident. D. Carla wishes to take out a life insurance policy on her best salesperson to protect the business from lost sales in the event of the salesperson's death. - Correct AnswersC Kim is injured in a house fire. When the bills come, the insurance company pays 80% of the cost, and Kim pays the rest. This is an example of A. coinsurance B. a deductible C. extraneous insurance D. policy limits - Correct AnswersA Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is A. a stock insurer B. a mutual insurer C. a nonpro t insurer D. a fraternal insurer - Correct AnswersB Which of the following people represents several insurance companies but owns the policy expirations? A. Independent agent B. Exclusive agent C. Direct writing agent D. General agent - Correct AnswersA Which of the following can bind an insurance company by oral or written agreement? A. Property and casualty producer B. Life producer C. Broker D. Solicitor - Correct AnswersA lloyds - Correct Answersare association, not an insurance company captiv - Correct Answerswholly-own subsidiary through the parent company re-insurers - Correct Answersinsurance company who insure other insurance company (reciprocal=provide insurance to each other) Agent - Correct Answersrepresents the company broker - Correct Answersrepresents the client commission - Correct Answers=service fee UNIT 2:Pretext interviews are A. alwaysillegal B. not permitted without a warrant sworn by a sitting judge C. generally accepted practice in the industry D. not permitted unless some evidence of criminal activity exists - Correct AnswersD A customer is anyone A. aboutwhomacompanycollectsinformation B. with whom a company has an ongoing relationship C. who prohibits the sharing of nonpublic personal information D. who permits the sharing of nonpublic personal information - Correct AnswersB The federal government A. istheprimaryauthorityforregulatingthe business of insurance B. does not get involved in regulating the business of insurance C. has the right to regulate the business of insurance to the extent that such business is not regulated by state law D. is prohibited by executive order from regulating any aspect of the insurance business - Correct AnswersC Insurance laws generally are written by A. thefederalgovernment B. the state legislature C. the state Department of Insurance D. the Commissioner - Correct AnswersB The head of the state Department of Insurance (usually called the Commissioner) is responsible for all of the following EXCEPT A. examining individual insurance policies before issuance B. administering and enforcing state insurance laws C. imposing penalties for violations of the Insurance Code D. issuing insurance licenses and certi cates of authority - Correct AnswersA The non financial regulatory activities of an insurance department fall under the broad heading of A. company conduct B. regulatory conduct C. market conduct D. producer conduct - Correct AnswersC The non financial regulatory activities of an insurance department fall under the broad heading of market conduct. Which of the following individuals would NOT be exempt from a producer licensing requirement? A. Alicia works in an insurance of office conferring directly with or offering advice to prospective purchasers about the beneits, terms, and conditions of insurance policies and urges a person to apply for policies Alicia thinks would be a good match. B. Brenda works for an insurer acting in the capacity of a special agent or agency supervisor assisting insurance producers by providing technical advice and assistance to licensed insurance producers on nonsales-related areas. C. Connie gathers information for the purpose of enrolling individuals under a group life insurance plan at her company. Connie also issues certi cates and assists in administering the plan. D. Del inspects, rates, and classi es risks. At times, Del also supervises the training of insurance producers. - Correct AnswersA Producers may act as A. agentsrepresentingtheinsurancecompany B. brokers representing the individual seeking insurance C. either agents representing the insurance company or brokers representing the individual seeking insurance D. neither agents representing the insurance company nor brokers representing the individual seeking insurance - Correct AnswersC Most insurance regulation takes place at A. theinternationallevel B. the national level C. the state level D. the local level - Correct AnswersC Applicants for insurance must be given advance notice including all of the following types of information EXCEPT A. the persons who are collecting information B. the kind of information to be collected C. the sources of information D. the persons with access to personal information - Correct AnswersA . Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual about whom a financial institution collects information is A. a customer B. a consumer C. a client D. a patron - Correct AnswersB Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual with whom a financial institution has an ongoing relationship is A. a customer B. a consumer C. a client D. a patron - Correct AnswersA Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual with whom a financial institution has an ongoing relationship is a customer. The Commissioner of Insurance has all of the following powers EXCEPT A. conducting investigations and examinations B. making reasonable rules and regulations C. promulgating insurance law D. approving insurance policy forms sold within the state - Correct AnswersC Non financial regulatory activities of an insurance department fall under the broad heading of A. market regulation B. conduct regulation C. market conduct D. insurance conduct - Correct AnswersC Associations organized to protect claimants, policyholders, annuitants, and creditors of financially impaired insurers are known as A. insuranceassociations B. department associations C. liability associations D. guaranty associations - Correct AnswersD #1 thing for insurance to do - Correct Answersprotect customers financial well being receivership - Correct Answersstate owns your credit UNIT 3: Insurance agents are appointed by A. the federal government B. the state Department of Insurance C. the Insurance Commissioner D. insurance companies - Correct AnswersD Insurance agents are appointed by insurance companies. Life and health insurance producers have the authority to bind an insurance company to a contract agreement. A. True B. False - Correct AnswersB Life and health insurance producers do not have the authority to bind an insurance company to a contract agreement. Ralph is a producer for Hoosier Insurance Company. His contract states that he is allowed to put the company's logo on his business cards and the door to his of office. This is an example of A. expressauthority B. implied authority C. lingering implied authority D. apparent authority - Correct AnswersA Express authority is authority the company gives to the producer in writing. Tom has always made a practice of having his policyholders mail their premium checks directly to his home address and forwarding them on to the insurer so that he is aware of anyone missing a payment and can contact policy owners directly if that should happen. His contract does not allow this practice, but the insurer is aware of the actions and has not asked him to stop. This practice is an example of A. expressed authority B. implied authority C. lingering implied authority D. apparent authority - Correct AnswersD Gina accepts the initial premium when she sells an insurance policy and sends it to the company with the app