General Insurance

Question 1

The person or entity that has insurance protection under a policy for a covered loss is known as __________

Answer 1

The insured

Question 2

Provide insurance coverage by issuing particular insurance policies or contracts

Answer 2

Insurers
(Insurance Companies or Carriers)

Question 3

Licensed individuals representing an insurance company when transacting insurance business

Answer 3

Insurance Agents

Question 4

Independent sales organizations that provide service and distribute insurance policies to consumers

Answer 4

Insurance Agencies

Question 5

Regulatory support organization created and governed by the chief insurance regulators and commissioners from the 50 states

Answer 5

National Association of Insurance Commissioners (NAIC)

Question 6

Agency that provides resources, research, legislative and regulatory recommendations and interpretations for state insurance regulators.

Answer 6

National Association of Insurance Commissioners (NAIC)

Question 7

NAIC has legal authority to enact or enforce insurance laws. T/F

Answer 7

False

Question 8

The primary goal of NAIC is to promote state uniformity. T/F

Answer 8

True

Question 9

A stock insurer is owned by its _____________

Answer 9

stockholders (or shareholders)

Question 10

Stockholders share in the company’s profits (T/F)

Answer 10

True
May receive corporate dividends taxable as ordinary income IF declared by the directors

Question 11

Traditionally, stock insurers issue participating policies (T/F)

Answer 11

False
Stock insurers issue non-participating policies since policyholders are NOT entitled to dividends

Question 12

A mutual insurer is owned by ________

Answer 12

policyholders (or members)

Question 13

Policyholders receive ______________, as a return of ____________________

Answer 13

non-taxable dividends
unused premiums

Question 14

Mutual insurers typically issue
a. Participating policies
b. Non-participating policies

Answer 14

a. participating policies

Question 15

Fraternal insurers: (select all that apply)
a. provide both life and health insurance
b. are primarily social organizations
c. typically draw from a given nationality, religious, lodge, order, or society

Answer 15

a. and b.
explanation: c. (do not draw from a specific nationality)

Question 16

What regulation/act protects the consumer’s right to privacy of credit and financial information

Answer 16

Fair Credit Reporting Act

Question 17

What does the Fair Credit Reporting Act require an insurer do?

Answer 17

1. Give pre-notification a credit report may be requested
2. Obtain the applicants written consent
3. If an adverse action is taken, such as denial of coverage, must provide notification with the reason for the adverse action

Question 18

When must a Currency Transaction Report (CTR) be filed with FINCEN (Financial Crimes Enforcement Network)

Answer 18

1. Every cash transaction that exceeds $10,000
2. Every wire transfer in excess of $3,000

Question 19

What involves the exchange of a small and definite expense (known as premium) for the promise of payment fro a large uncertain loss

Answer 19

Insurance Contract

Question 20

Term meaning to compensate for a loss (or make whole again)

Answer 20

To indemnify

Question 21

Based on the __________________, insurance is designed to restore and insured to the same physical or financial condition which existed prior to the loss.

Answer 21

Principle of Indemity

Question 22

Based off of the Principle of Indemnity, are individuals allowed to make a profit?

Answer 22

No

Question 23

What forms do indemnity take?

Answer 23

1. Cash
2. Payments to physicians or hospitals for care and services

Question 24

Insurable interest does NOT need to exist between the the policy owner, and the person insured under the policy.

Answer 24

False

Question 25

Insurable interest must exist at the time of the application, as well as the time of the loss.

Answer 25

False insurable interest only needs to exist at the time of the application

Question 26

Why would lack of insurable interest make the purchase or payment of a claim illegal?

Answer 26

It would allow a person to profit from the loss because they did not suffer a financial or economic loss

Question 27

What are the essential elements to a legal contract? (select all that apply) 1. Competent parties 2. Legal purpose 3. Agreement (offer & acceptance) 4. Consideration

Answer 27

All of the above

Question 28

For the purposes of insurance, what age makes an individual a minor?

Answer 28

Under the age of 16

Question 29

Parties are assumed to be competent unless they are one of the following:

Answer 29

1. Minors 2. Mentally incompetent 3. Under the influence of drugs or alcohol

Question 30

Define legal purpose in terms of an essential element of an insurance contract

Answer 30

Insurance may not be issues for illegal activity. Intentional acts that cause a loss, such as arson or murder, remove the legal aspect of purchasing insurance.

Question 31

When an applicant is the one considered to be making the offer, what is required?

Answer 31

An application along with the initial premium

Question 32

What form does an insurance company's acceptance of the agreement of a legal contract take?

Answer 32

The approval of the application allowing the policy to be issued