Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Health and Life Insurance Industry (ExamFX) > Ch. 1 (General Insurance) > Flashcards

Ch. 1 (General Insurance) Flashcards

1
Q

What two elements are necessary for a life insurance contract to have a legal purpose?

A

Insurable interest and consent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a warranty in an insurance contract?

A

An absolutely true statement upon which the validity of the insurance contact is based.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Wagering on a sports event is known as what type of risk?

A

Speculative.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

A

Insurer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the three types of agent authority?

A

Express, implied, and apparent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

An applicant conceals relevant health information on an application. The applicant presents what type of hazard?

A

Moral.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

If an agent fails to obtain the applicant’s signature on the insurance application, what must the insurer do?

A

Send the application back to the applicant for signature.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What type of report provides information about the applicant’s hobbies, habits, and financial status?

A

Inspection report.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What type of insurer is formed under the laws of a different country?

A

Alien insurer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When risks of higher probability of loss are seeking insurance more often than other risks, this is known as what?

A

Adverse selection.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

For the purpose of insurance, what is risk?

A

Uncertainty of loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the three types of hazards?

A

Physical, moral, and morale.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

In the agent/insurer relationship, who is considered the principal?

A

The insurer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

If an insurer meets the state’s financial requirements and is approved to transact business in the state, it is considered what type of insurer?

A

Authorized or admitted.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

A

Fiduciary.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the term for the causes of loss insured against in an insurance policy?

A

Peril.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Whom does an insurance agent represent?

A

The insurer / insurance company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Conditions that increase the risk of a loss are known as what?

A

Hazards.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

The insurer organized to return a profit to the stockholders is what type of insurer?

A

Stock company.

20
Q

What document is required for an insurance company to transact insurance?

A

Certificate of Authority.

21
Q

What type of risk is insurable?

A

Pure.

22
Q

The type of insurance company organized to return any surplus money to its policyholders is known as what?

A

Mutual company.

23
Q

When a change need to be made on the application for insurance, which is the best method for correcting the information?

A

Complete a new application or ask the applicant to initial the correction on the original application.

24
Q

In forming an insurance contract, when does an acceptance usually occur?

A

When the insurer approves a prepaid application.

25
Q

What are the strategies used by underwriters to prevent adverse selection?

A

Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate.

26
Q

In insurance, when is the offer usually made on a contract?

A

When the insurance application is submitted.

27
Q

Insurers are usually classified according to their domicile. What are the three types of insurers?

A

Domestic, foreign, and alien.

28
Q

Insurance is a contract that protects the insured from what?

A

Loss.

29
Q

An Insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer’s classification in Nevada?

A

Foreign.

30
Q

An insurance company paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

A

Mutual.

31
Q

A situation in which a person can only experience a loss and no gain presents what type of risk?

A

Pure risk.

32
Q

When would a misrepresentation on an insurance application be considered a fraud?

A

When it is intentional and material.

33
Q

What do individuals use to transfer their risk of loss to a larger group?

A

Insurance.

34
Q

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

A

Loss.

35
Q

According to the Law of Agency, a principal is represented by whom?

A

The agent/producer.

36
Q

Whose responsibility is it to determine that all the questions on an insurance application are answered?

A

The agent’s.

37
Q

What are the five characteristics of an ideally insurable risk?

A

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) coverage cannot be mandatory.

38
Q

What entities make up the medical information bureau?

A

Insurers.

39
Q

If an applicant does not receive his or her insurance policy, who would be held responsible?

A

The agent.

40
Q

What are the four elements of an insurance contract?

A

1) Agreement (offer and acceptance), 2) consideration, 3) competent parties, and 4) legal purpose.

41
Q

Who owns stock companies?

A

Stockholders.

42
Q

What is the best way to handle incomplete insurance applications?

A

Return the application to the applicant for completion.

43
Q

When does an insurance policy go into effect?

A

When the policy is delivered, and the premium is paid.

44
Q

A person who does not lock the doors shows an indifferent attitude. This person presents what type of hazard?

A

Morale.

45
Q

An insurance company that is formed under the laws of another state known as what type of insurer?

A

Foreign.

Health and Life Insurance Industry (ExamFX) (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions