Alabama Life & Health Insurance Exam|
194 Questions With Correct Answers|
(Verified by EXPERTS)GRADED A+
Which of the following would be considered a speculative risk? - ANSWERSThe
possibility the painting you bought might be a long-lost masterpiece
A speculative risk is one in which there is a chance for either loss or gain. Example:
Gambling, Casino's, Lottery, etc. All of the other choices describe pure risk, where there
is no chance of gain, only a chance of loss exists.
Which is the proper term for a company owned by its policy owners? - ANSWERSA
mutual insurance company
A producer who is acting as an agent is representing: - ANSWERSAlways the insurer
All of the following are elements of a contract, except: - ANSWERSAuthority
All enforceable contracts must include these characteristics: offer and acceptance
(agreement), considerations, competent parties, and legal purpose. Authority is not
considered one of the elements of a legal contract.
Each of the following would be an element in the definition of fraud, except: -
ANSWERSAn individual warrants a fact stated on the application
A warranted fact is one guaranteed to be true. Although no statement on an application
is regarded as warranty, no fraud is involved if a statement is guaranteed to be true.
Examples of Fraud - ANSWERSIntentional material misrepresentation with the intent of
causing injury to another party
Withholding of known material facts
A false statement on the application that is material to the acceptance of the risk
A company that is licensed to sell insurance in a particular state is: - ANSWERSAn
authorized Company
In order to be valid, a contract must be between individuals considered legally able to
enter into an agreement. This principle is known as: - ANSWERSCompetent parties
,An insurance contract is an aleatory contract. This means: - ANSWERSEqual value is
not given by both parties to the contract
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of last resort for individuals
or businesses that have been rejected by voluntary market insurers. -
ANSWERSResidual
To address adverse selection what can an insurer legally do? - ANSWERSEstablish
and enforce sound underwriting practices
Underwriting helps to protect the insurer against adverse selection and accepting risks
that are more likely than average to suffer losses.
A contract that is drafted by an insurer and receives no input or alteration from the
insured, is considered a(n): - ANSWERSContract of Adhesion
_________ refers to the jurisdiction where an insurer was formed or incorporated. -
ANSWERSDomicile: Domicile refers to the jurisdiction either state or country where an
insurer was formed or incorporated.
_____________ insurance allows for insurance coverage to be obtained when not
available from admitted carriers. - ANSWERSSurplus Lines
Insurance can be obtained through surplus lines brokers (producers) from non-admitted
insurers.
To make insurance more affordable and protect the insurance company from paying out
too much in claims, insurers will: - ANSWERSReinsure the risk
Reinsurance is what makes insurance affordable. Reinsurance companies are
insurance companies that accept all or a portion of the financial risk of loss from the
insurance company.
The field underwriter is the _________ and is not a determiner of insurability. -
ANSWERSProducer
The producer is in the field soliciting applications for insurance and in effect is another
pair of eyes and ears for the insurer in helping to issue policies to insurable prospects.
Third-party ownership refers to: - ANSWERSA situation where the policyowner is
someone other than the insured
, Which statement best describes the term reserve? - ANSWERSThat amount that, when
increased by future premiums on outstanding policies, and interest on those premiums
will enable the company to meet future death claims
The applicant, if other than the proposed insured, must have: - ANSWERSAn insurable
interest in the life of the insured
Controlled business may be defined as insurance sold: - ANSWERSTo the producer,
the producer's family and friends, and the producer's business associates
With regard to life insurance policies, loading refers to: - ANSWERSAssignment of the
appropriate share of the company's operating expenses to each policy
Which of the following statements about the average number of people who die each
year is true? - ANSWERSIt is called the mortality rate
Mortality Rate: which is the statistical probability of death in a large population of
insureds.
Which of the following is NOT a characteristic of life insurance as property? -
ANSWERSIt requires a fund portfolio manager
Characteristics:
It creates an immediate estate
It requires no physical maintenance
It may be paid for in installments
The most effective way to ensure that the applicant will accept the policy when it is
issued is: - ANSWERSTo have the applicant pay the initial premium at the time of
application
Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son,
Donald. Suppose that when Donald reaches age 21 his father presents him with the
policy as a gift. Which of the following statements is NOT correct? - ANSWERSDonald
must change the beneficiaries immediately
CORRECT:
The premium will continue to be based on his original age of 5
Donald has enjoyed protection against the problems of premature death
The face value of Donald's policy has increased by 5 times
194 Questions With Correct Answers|
(Verified by EXPERTS)GRADED A+
Which of the following would be considered a speculative risk? - ANSWERSThe
possibility the painting you bought might be a long-lost masterpiece
A speculative risk is one in which there is a chance for either loss or gain. Example:
Gambling, Casino's, Lottery, etc. All of the other choices describe pure risk, where there
is no chance of gain, only a chance of loss exists.
Which is the proper term for a company owned by its policy owners? - ANSWERSA
mutual insurance company
A producer who is acting as an agent is representing: - ANSWERSAlways the insurer
All of the following are elements of a contract, except: - ANSWERSAuthority
All enforceable contracts must include these characteristics: offer and acceptance
(agreement), considerations, competent parties, and legal purpose. Authority is not
considered one of the elements of a legal contract.
Each of the following would be an element in the definition of fraud, except: -
ANSWERSAn individual warrants a fact stated on the application
A warranted fact is one guaranteed to be true. Although no statement on an application
is regarded as warranty, no fraud is involved if a statement is guaranteed to be true.
Examples of Fraud - ANSWERSIntentional material misrepresentation with the intent of
causing injury to another party
Withholding of known material facts
A false statement on the application that is material to the acceptance of the risk
A company that is licensed to sell insurance in a particular state is: - ANSWERSAn
authorized Company
In order to be valid, a contract must be between individuals considered legally able to
enter into an agreement. This principle is known as: - ANSWERSCompetent parties
,An insurance contract is an aleatory contract. This means: - ANSWERSEqual value is
not given by both parties to the contract
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of last resort for individuals
or businesses that have been rejected by voluntary market insurers. -
ANSWERSResidual
To address adverse selection what can an insurer legally do? - ANSWERSEstablish
and enforce sound underwriting practices
Underwriting helps to protect the insurer against adverse selection and accepting risks
that are more likely than average to suffer losses.
A contract that is drafted by an insurer and receives no input or alteration from the
insured, is considered a(n): - ANSWERSContract of Adhesion
_________ refers to the jurisdiction where an insurer was formed or incorporated. -
ANSWERSDomicile: Domicile refers to the jurisdiction either state or country where an
insurer was formed or incorporated.
_____________ insurance allows for insurance coverage to be obtained when not
available from admitted carriers. - ANSWERSSurplus Lines
Insurance can be obtained through surplus lines brokers (producers) from non-admitted
insurers.
To make insurance more affordable and protect the insurance company from paying out
too much in claims, insurers will: - ANSWERSReinsure the risk
Reinsurance is what makes insurance affordable. Reinsurance companies are
insurance companies that accept all or a portion of the financial risk of loss from the
insurance company.
The field underwriter is the _________ and is not a determiner of insurability. -
ANSWERSProducer
The producer is in the field soliciting applications for insurance and in effect is another
pair of eyes and ears for the insurer in helping to issue policies to insurable prospects.
Third-party ownership refers to: - ANSWERSA situation where the policyowner is
someone other than the insured
, Which statement best describes the term reserve? - ANSWERSThat amount that, when
increased by future premiums on outstanding policies, and interest on those premiums
will enable the company to meet future death claims
The applicant, if other than the proposed insured, must have: - ANSWERSAn insurable
interest in the life of the insured
Controlled business may be defined as insurance sold: - ANSWERSTo the producer,
the producer's family and friends, and the producer's business associates
With regard to life insurance policies, loading refers to: - ANSWERSAssignment of the
appropriate share of the company's operating expenses to each policy
Which of the following statements about the average number of people who die each
year is true? - ANSWERSIt is called the mortality rate
Mortality Rate: which is the statistical probability of death in a large population of
insureds.
Which of the following is NOT a characteristic of life insurance as property? -
ANSWERSIt requires a fund portfolio manager
Characteristics:
It creates an immediate estate
It requires no physical maintenance
It may be paid for in installments
The most effective way to ensure that the applicant will accept the policy when it is
issued is: - ANSWERSTo have the applicant pay the initial premium at the time of
application
Allen purchases an estate builder (jumping juvenile) policy for his 5-year old son,
Donald. Suppose that when Donald reaches age 21 his father presents him with the
policy as a gift. Which of the following statements is NOT correct? - ANSWERSDonald
must change the beneficiaries immediately
CORRECT:
The premium will continue to be based on his original age of 5
Donald has enjoyed protection against the problems of premature death
The face value of Donald's policy has increased by 5 times
