WEBCE TEST QUESTIONS AND ANSWERS
which of the following situations presents a situation of pure risk?
-knowing that his family is depending on him, Frank wants to insure his life
-wanting to increase his retirement savings, Saul invests his life savings in the stock
market
-Ralph takes a second mortgage on his house and uses the proceeds to gamble
-wanting better job security, Ron cashes in his life insurance to start his own business -
Answer- knowing that his family is depending on him, Frank wants to insure his own life
only pure risk is insurable. Pure risk may only result in a loss, unlike speculative risk
which may result in a gain.
Agent Jill received a letter from the Department of insurance asking her to submit
verification of having completed the continued education requirements for the previous
licensing period. Three weeks later, the department sent another letter. Which penalty
may the Department impose if Jill has still not responded to their request a month later?
- Answer- a fine up to $100 per day per violation
A producer has 30 days to respond to a written inquiry from the Department
Jim's policy expired due to nonpayment of premium. His agent sends him a statement
the following month without notice of the lapse. If Jim pays the premium and later
suffers a loss for which he files a claim, what will prevent the insurer from denying the
claim?
-estoppel
-utmost good faith
-reasonable expectations
-waiver - Answer- estoppel
BBC insurers filed premium rates for its new line of variable products on January 15.
Within how many days must the commissioner approve or disapprove the rates? -
Answer- 30 days
all rate filings are subject to a 30-day waiting period before they become effective.
The commissioner of insurance can examine the business accounts, transactions, and
records of insurers and producers as often as necessary, but must do so at least once
in how many years? - Answer- 5 years
Acme Insurance and Apogee insurance agree to offer different premium rates for
persons of equal risk within a particular class. They also agree to limit benefits paid to
insureds within this class if the insureds live within certain counties of PA. What are
Acme and Apogee engaging in?
,-acceptable marketing and underwriting practices
-unfair and prohibited business practices
-insurance fraud
-false advertising - Answer- they are engaging in unfair and prohibited business
practices
they are agreeing to unreasonable restraint of trade in insurance business, and they are
engaging in unfair discrimination
which of the following is NOT a remedy available to the PA commissioner of insurance
for committing an unfair method of competition?
-imprisonment
-cease and desist order
-suspension of license
-revocation of license - Answer- imprisonment is not a punishment for committing an
unfair method of competition
you cannot be arrested for committing an unfair method of competition
which of the following is NOT an unfair claims settlement practice if committed by an
insurance company in PA?
-failing to promptly acknowledge communications about claims
-failing to promptly settle a claim for which liability is uncertain
-appealing from an arbitration award in favor of an insured to compel the insured to
accept a lower settlement
-failing to affirm or deny coverage within a reasonable time after completing a claim
investigation - Answer- ailing to promptly settle a claim for which liability is uncertain is
NOT an unfair claims settlement practice
Jeff is a licensed insurance producer in both PA and NY. he is charged with
embezzlement in NY, and his first pretrial hearing is set for March 1. He must notify the
PA commissioner of insurance within how many days of this hearing? - Answer- Jeff
has 30 days to notify the PA commissioner of insurance of the disciplinary action being
taken against him
which of the following is NOT an unfair claims settlement practice if committed by an
insurance company in PA?
-failing to promptly acknowledge communications about claims
-failing to promptly settle a claim for which liability is uncertain
-offering to settle claims for less than due to encourage litigation
-raising policy defenses to reduce a claim - Answer- failing to promptly settle a claim for
which liability is uncertain is not an unfair claims settlement practice
, Stacy is a captive agent for best rates insurance company. Her agency contract gives
her permission to print and use business cards with the company's logo and submit
applications for its policy. What type of authority does stacy have to take these actions?
- Answer- Stacy has express authority due to the contract between her and the
insurance company specifically allowing her act in such a way
to boost her sales at the end of the year, agent Trudy started offering potential clients a
$250 cash gift card in exchange for purchasing a life insurance policy. which ethical
sales practice has she violated?
-twisting
-churning
-rebating
-false information - Answer- rebating
its illegal to offer gifts in exchange for the purchase of an insurance policy
which of the following is not a power granted to the PA commissioner of insurance?
-licensing producers and companies
-enforcing insurance laws
-issuing regulations to administer insurance laws
-prosecuting individuals for violating insurance laws - Answer- the PA commissioner of
insurance CANNOT prosecute individuals for violating insurance laws
which is not necessary to create a legal contract?
-consideration
-offer
-warranty
-acceptance - Answer- warranty is not necessary to create a legal contract
the federal risk retention act of 1986 applies to which business?
-self-insuring business
-re-insurers
-credit life insurance companies
-high-risk business insurers - Answer- the federal risk retention act of 1986 applies to
self-insuring businesses
Jeremy has had an individual health insurance policy for many years because of his
family's history of cancer. the tendency of someone like jeremy to buy and retain
insurance is known as:
-implied selection
which of the following situations presents a situation of pure risk?
-knowing that his family is depending on him, Frank wants to insure his life
-wanting to increase his retirement savings, Saul invests his life savings in the stock
market
-Ralph takes a second mortgage on his house and uses the proceeds to gamble
-wanting better job security, Ron cashes in his life insurance to start his own business -
Answer- knowing that his family is depending on him, Frank wants to insure his own life
only pure risk is insurable. Pure risk may only result in a loss, unlike speculative risk
which may result in a gain.
Agent Jill received a letter from the Department of insurance asking her to submit
verification of having completed the continued education requirements for the previous
licensing period. Three weeks later, the department sent another letter. Which penalty
may the Department impose if Jill has still not responded to their request a month later?
- Answer- a fine up to $100 per day per violation
A producer has 30 days to respond to a written inquiry from the Department
Jim's policy expired due to nonpayment of premium. His agent sends him a statement
the following month without notice of the lapse. If Jim pays the premium and later
suffers a loss for which he files a claim, what will prevent the insurer from denying the
claim?
-estoppel
-utmost good faith
-reasonable expectations
-waiver - Answer- estoppel
BBC insurers filed premium rates for its new line of variable products on January 15.
Within how many days must the commissioner approve or disapprove the rates? -
Answer- 30 days
all rate filings are subject to a 30-day waiting period before they become effective.
The commissioner of insurance can examine the business accounts, transactions, and
records of insurers and producers as often as necessary, but must do so at least once
in how many years? - Answer- 5 years
Acme Insurance and Apogee insurance agree to offer different premium rates for
persons of equal risk within a particular class. They also agree to limit benefits paid to
insureds within this class if the insureds live within certain counties of PA. What are
Acme and Apogee engaging in?
,-acceptable marketing and underwriting practices
-unfair and prohibited business practices
-insurance fraud
-false advertising - Answer- they are engaging in unfair and prohibited business
practices
they are agreeing to unreasonable restraint of trade in insurance business, and they are
engaging in unfair discrimination
which of the following is NOT a remedy available to the PA commissioner of insurance
for committing an unfair method of competition?
-imprisonment
-cease and desist order
-suspension of license
-revocation of license - Answer- imprisonment is not a punishment for committing an
unfair method of competition
you cannot be arrested for committing an unfair method of competition
which of the following is NOT an unfair claims settlement practice if committed by an
insurance company in PA?
-failing to promptly acknowledge communications about claims
-failing to promptly settle a claim for which liability is uncertain
-appealing from an arbitration award in favor of an insured to compel the insured to
accept a lower settlement
-failing to affirm or deny coverage within a reasonable time after completing a claim
investigation - Answer- ailing to promptly settle a claim for which liability is uncertain is
NOT an unfair claims settlement practice
Jeff is a licensed insurance producer in both PA and NY. he is charged with
embezzlement in NY, and his first pretrial hearing is set for March 1. He must notify the
PA commissioner of insurance within how many days of this hearing? - Answer- Jeff
has 30 days to notify the PA commissioner of insurance of the disciplinary action being
taken against him
which of the following is NOT an unfair claims settlement practice if committed by an
insurance company in PA?
-failing to promptly acknowledge communications about claims
-failing to promptly settle a claim for which liability is uncertain
-offering to settle claims for less than due to encourage litigation
-raising policy defenses to reduce a claim - Answer- failing to promptly settle a claim for
which liability is uncertain is not an unfair claims settlement practice
, Stacy is a captive agent for best rates insurance company. Her agency contract gives
her permission to print and use business cards with the company's logo and submit
applications for its policy. What type of authority does stacy have to take these actions?
- Answer- Stacy has express authority due to the contract between her and the
insurance company specifically allowing her act in such a way
to boost her sales at the end of the year, agent Trudy started offering potential clients a
$250 cash gift card in exchange for purchasing a life insurance policy. which ethical
sales practice has she violated?
-twisting
-churning
-rebating
-false information - Answer- rebating
its illegal to offer gifts in exchange for the purchase of an insurance policy
which of the following is not a power granted to the PA commissioner of insurance?
-licensing producers and companies
-enforcing insurance laws
-issuing regulations to administer insurance laws
-prosecuting individuals for violating insurance laws - Answer- the PA commissioner of
insurance CANNOT prosecute individuals for violating insurance laws
which is not necessary to create a legal contract?
-consideration
-offer
-warranty
-acceptance - Answer- warranty is not necessary to create a legal contract
the federal risk retention act of 1986 applies to which business?
-self-insuring business
-re-insurers
-credit life insurance companies
-high-risk business insurers - Answer- the federal risk retention act of 1986 applies to
self-insuring businesses
Jeremy has had an individual health insurance policy for many years because of his
family's history of cancer. the tendency of someone like jeremy to buy and retain
insurance is known as:
-implied selection
