Rhode Island insurance exam spring 2023 with complete
solution
The role of insurance is to
transfer the risk of financial loss from an individual or business to an insurance company
Organized and incorporated under state law owned by stockholders who get a paid share
of the company's profit through dividends. also referred to as a nonparticipating or non-
par bc policy holder do not participate in paid dividends
stock insurance company
Organized and incorporated under state law. but they have no stockholders. instead, the
policyholders own the company. owners get paid a share of the companies profits through
dividends. participating or par companies bc policy owners do not participate in paid
dividends
mutual insurer companies
Process of a stock company being converted into a mutual company
mutualization
Process of a mutual company being converted into a stock company
demutualization
An association formed to underwrite and issue insurance like coverage on certain items
and areas that might otherwise be uninsurable
Lloyds of London
Are a specialized branch of the insurance industry that insurers other insurance company's
risk. *is an arrangement by which an insurance company transfers or sells a portion of the
risk to a reinsurance company
reinsurers
The insurance company transferring the risk
ceding company
Industrial insurance sold by home service or debit insurance companies
home service insurers
When 3rd party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have
insurable interest in the proposed insured
Which is considered a statement that is assured to be true in every respect
warranty
Which best describes a warranty
statement guaranteed to be true
Which of these is not considered to be an element of an insurance contract
negotiating
A life insurance policy would be considered contract without?
, insurable interest
All of the following (bilateral unilateral aleatory adhesion) are considered to be typical
characteristics describing the nature of an insurance contract except
bilateral
In an insurance contract the insurer is the only party who makes a legally enforceable
promise what kind of contract is this
unilateral
Taking receipt of premiums and holding them for the insurance company is an example of
fiduciary responsibility
A policy of adhesion can only be modified by whom
the insurance company
In regards to representations or warranties, which of these statements is TRUE?
if material to the risk, false representation will void a policy
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called
representations
life and health insurance policies are
unilateral contracts
which of the following consists of an offer, acceptance, and consideration?
contract
when must insurable interests exist for a life insurance contract to be valid
inception of the contract
The part of a life insurance policy guaranteed to be true is called a(n)
warranty
K is shopping for a permanent life insurance policy that will offer her the most protection
per $. of annual premium. which of these policies best fits her needs?
straight life
What type of life policy has a death benefit that adjusts periodically and is written for a
specific period of time?
decreasing term
under a graded premium whole life policy
the premium increases each year during the early years of the contract and remains the same after
that time
which statement is true regarding a variable whole life policy
a minimum guaranteed death benefit is provided
Which of these life products is NOT considered interest-sensitive?
modified whole life
which of the following type of policies pays a benefit if the insured goes blind
AD&D
D needs life insurance that provides coverage for only a limited amount of time while also
paying the lowest possible premium. What kind of policy is needed?
solution
The role of insurance is to
transfer the risk of financial loss from an individual or business to an insurance company
Organized and incorporated under state law owned by stockholders who get a paid share
of the company's profit through dividends. also referred to as a nonparticipating or non-
par bc policy holder do not participate in paid dividends
stock insurance company
Organized and incorporated under state law. but they have no stockholders. instead, the
policyholders own the company. owners get paid a share of the companies profits through
dividends. participating or par companies bc policy owners do not participate in paid
dividends
mutual insurer companies
Process of a stock company being converted into a mutual company
mutualization
Process of a mutual company being converted into a stock company
demutualization
An association formed to underwrite and issue insurance like coverage on certain items
and areas that might otherwise be uninsurable
Lloyds of London
Are a specialized branch of the insurance industry that insurers other insurance company's
risk. *is an arrangement by which an insurance company transfers or sells a portion of the
risk to a reinsurance company
reinsurers
The insurance company transferring the risk
ceding company
Industrial insurance sold by home service or debit insurance companies
home service insurers
When 3rd party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have
insurable interest in the proposed insured
Which is considered a statement that is assured to be true in every respect
warranty
Which best describes a warranty
statement guaranteed to be true
Which of these is not considered to be an element of an insurance contract
negotiating
A life insurance policy would be considered contract without?
, insurable interest
All of the following (bilateral unilateral aleatory adhesion) are considered to be typical
characteristics describing the nature of an insurance contract except
bilateral
In an insurance contract the insurer is the only party who makes a legally enforceable
promise what kind of contract is this
unilateral
Taking receipt of premiums and holding them for the insurance company is an example of
fiduciary responsibility
A policy of adhesion can only be modified by whom
the insurance company
In regards to representations or warranties, which of these statements is TRUE?
if material to the risk, false representation will void a policy
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called
representations
life and health insurance policies are
unilateral contracts
which of the following consists of an offer, acceptance, and consideration?
contract
when must insurable interests exist for a life insurance contract to be valid
inception of the contract
The part of a life insurance policy guaranteed to be true is called a(n)
warranty
K is shopping for a permanent life insurance policy that will offer her the most protection
per $. of annual premium. which of these policies best fits her needs?
straight life
What type of life policy has a death benefit that adjusts periodically and is written for a
specific period of time?
decreasing term
under a graded premium whole life policy
the premium increases each year during the early years of the contract and remains the same after
that time
which statement is true regarding a variable whole life policy
a minimum guaranteed death benefit is provided
Which of these life products is NOT considered interest-sensitive?
modified whole life
which of the following type of policies pays a benefit if the insured goes blind
AD&D
D needs life insurance that provides coverage for only a limited amount of time while also
paying the lowest possible premium. What kind of policy is needed?
