PA Accident and Health Insurance Practice Test Questions and Correct Answers

Why are dividends from a mutual insurer not subject to taxation? because dividends are considered to be a return of premium what kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? participating life insurance policy A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called a self funded plan An insurer's claim settlement practices are regulated by the states insurance departments people with higher loss exposure have the tendency to purchase insurance more often than those of average risk. this is called adverse selection Insurance represents the process of risk transference under a contract of adhesion the terms must be accepted OR rejected in full Legal purpose is a term used in contract law meaning there must be legal reasons for entering into the contract in order for a contact to be valid, it must contain an offer and acceptance in an insurance contract the element that shows each party is giving something of value is called consideration which of the following is present when an applicant stands to lose value if the insured dies? insurable interest which contract is insurable interest a component of? legal purpose in an insurance contract,the applicant's "consideration" is the statements made in the application and the premium what makes an insurance policy a unilateral contract only the insurer is legally bound