PA LIFE, ACCIDENT, & HEALTH INSURANCE EXAM | QUESTIONS
AND ANSWERS | VERIFIED ANSWERS 100% CORRECT | LATEST
EXAM UPDATE
Insurance - CORRECT ANSWER - defined as the transfer of PURE risk to the
insurance company in consideration for a premium.
The chance of loss without any chance of gain is called - CORRECT
ANSWER - pure risk
Speculative risk - CORRECT ANSWER - has the possibility for gain or loss
and is not insurable.
Risk is defined as the - CORRECT ANSWER - chance of loss.
A condition that could result in a loss is known as an - CORRECT ANSWER -
exposure
A hazard is something that increases - CORRECT ANSWER - the chance of
loss.
The presence of a physical hazard - CORRECT ANSWER - increases the
chance of a loss occurring.
A peril is - CORRECT ANSWER - defined as a cause of loss, such as fire.
To be insurable, - CORRECT ANSWER - losses must be calculable.
,The law of large numbers - CORRECT ANSWER - allows insurers to predict
claims more accurately.
The law of large numbers applies to - CORRECT ANSWER - groups of
people, not to individuals.
The more people in the group, - CORRECT ANSWER - the more accurate the
predictions are.
Most insurers buy reinsurance - CORRECT ANSWER - to protect themselves
in the event of a catastrophic loss.
Insurance laws are not required - CORRECT ANSWER - to be uniform from
one state to another.
A stock insurer - CORRECT ANSWER - may pay dividends to its
shareholders (stockholders), but they may not be guaranteed.
A reciprocal insurance company is managed by an - CORRECT ANSWER -
attorney-in-fact.
An unincorporated association of individuals who insure each other is known as
- CORRECT ANSWER - a reciprocal insurer.
The government offers insurance primarily based upon - CORRECT
ANSWER - social needs, such as flood insurance and workers compensation,
but does not offer insurance for the purpose of preventing fraud.
A foreign company - CORRECT ANSWER - has their home office in another
state.
,An insurer incorporated outside of the U.S. who sells in the U.S. is -
CORRECT ANSWER - an alien company.
A producer may be personally liable when - CORRECT ANSWER - violating
the producer's contract.
Producers represent - CORRECT ANSWER - the insurance company, not the
insured.
Independent producers - CORRECT ANSWER - own their own accounts and
are not insurance company employees.
Producers have - CORRECT ANSWER - express, implied and apparent
authority.
The authority a producer - CORRECT ANSWER - has that is written in his or
her contract is known as express authority.
A producer's binding authority (if any) - CORRECT ANSWER - is expressed
(written down) in the producer's contract with the insurer the producer
represents.
The authority not expressly (written) granted, - CORRECT ANSWER - but is
actual authority the producer has to transact normal business activities, is known
as implied authority.
The elements of a legal contract may be remembered - CORRECT ANSWER -
by the acronym C-O-A-L (consideration, offer, acceptance, legal purpose and
legal capacity).
, A requirement for a valid contract - CORRECT ANSWER - is offer and
acceptance, or mutual agreement.
Advertising the availability of insurance is not - CORRECT ANSWER -
considered to be an offer.
A specific and definite proposal to enter into a contract is known as -
CORRECT ANSWER - an offer.
The consideration on a policy need - CORRECT ANSWER - not be equal.
A policy may not be voided - CORRECT ANSWER - due to unequal
consideration.
Under the consideration clause, - CORRECT ANSWER - something of value
must be exchanged.
Because insurance contracts are contracts of adhesion, - CORRECT ANSWER
- policy ambiguities always favor the insured.
Insurance policies are considered - CORRECT ANSWER - to be unilateral
contracts, in that only one party makes an enforceable promise the insurer.
The principle of indemnity states - CORRECT ANSWER - the purpose of
insurance is to restore the insured to the same position as before the loss
occurred.
The principle of utmost good faith states - CORRECT ANSWER - that all
parties to an insurance transaction are honest.
AND ANSWERS | VERIFIED ANSWERS 100% CORRECT | LATEST
EXAM UPDATE
Insurance - CORRECT ANSWER - defined as the transfer of PURE risk to the
insurance company in consideration for a premium.
The chance of loss without any chance of gain is called - CORRECT
ANSWER - pure risk
Speculative risk - CORRECT ANSWER - has the possibility for gain or loss
and is not insurable.
Risk is defined as the - CORRECT ANSWER - chance of loss.
A condition that could result in a loss is known as an - CORRECT ANSWER -
exposure
A hazard is something that increases - CORRECT ANSWER - the chance of
loss.
The presence of a physical hazard - CORRECT ANSWER - increases the
chance of a loss occurring.
A peril is - CORRECT ANSWER - defined as a cause of loss, such as fire.
To be insurable, - CORRECT ANSWER - losses must be calculable.
,The law of large numbers - CORRECT ANSWER - allows insurers to predict
claims more accurately.
The law of large numbers applies to - CORRECT ANSWER - groups of
people, not to individuals.
The more people in the group, - CORRECT ANSWER - the more accurate the
predictions are.
Most insurers buy reinsurance - CORRECT ANSWER - to protect themselves
in the event of a catastrophic loss.
Insurance laws are not required - CORRECT ANSWER - to be uniform from
one state to another.
A stock insurer - CORRECT ANSWER - may pay dividends to its
shareholders (stockholders), but they may not be guaranteed.
A reciprocal insurance company is managed by an - CORRECT ANSWER -
attorney-in-fact.
An unincorporated association of individuals who insure each other is known as
- CORRECT ANSWER - a reciprocal insurer.
The government offers insurance primarily based upon - CORRECT
ANSWER - social needs, such as flood insurance and workers compensation,
but does not offer insurance for the purpose of preventing fraud.
A foreign company - CORRECT ANSWER - has their home office in another
state.
,An insurer incorporated outside of the U.S. who sells in the U.S. is -
CORRECT ANSWER - an alien company.
A producer may be personally liable when - CORRECT ANSWER - violating
the producer's contract.
Producers represent - CORRECT ANSWER - the insurance company, not the
insured.
Independent producers - CORRECT ANSWER - own their own accounts and
are not insurance company employees.
Producers have - CORRECT ANSWER - express, implied and apparent
authority.
The authority a producer - CORRECT ANSWER - has that is written in his or
her contract is known as express authority.
A producer's binding authority (if any) - CORRECT ANSWER - is expressed
(written down) in the producer's contract with the insurer the producer
represents.
The authority not expressly (written) granted, - CORRECT ANSWER - but is
actual authority the producer has to transact normal business activities, is known
as implied authority.
The elements of a legal contract may be remembered - CORRECT ANSWER -
by the acronym C-O-A-L (consideration, offer, acceptance, legal purpose and
legal capacity).
, A requirement for a valid contract - CORRECT ANSWER - is offer and
acceptance, or mutual agreement.
Advertising the availability of insurance is not - CORRECT ANSWER -
considered to be an offer.
A specific and definite proposal to enter into a contract is known as -
CORRECT ANSWER - an offer.
The consideration on a policy need - CORRECT ANSWER - not be equal.
A policy may not be voided - CORRECT ANSWER - due to unequal
consideration.
Under the consideration clause, - CORRECT ANSWER - something of value
must be exchanged.
Because insurance contracts are contracts of adhesion, - CORRECT ANSWER
- policy ambiguities always favor the insured.
Insurance policies are considered - CORRECT ANSWER - to be unilateral
contracts, in that only one party makes an enforceable promise the insurer.
The principle of indemnity states - CORRECT ANSWER - the purpose of
insurance is to restore the insured to the same position as before the loss
occurred.
The principle of utmost good faith states - CORRECT ANSWER - that all
parties to an insurance transaction are honest.
