License test

Question 1

what year was the Mccarren-Ferguson act enacted?

Answer 1

1945

Question 2

The amount of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called?

Answer 2

Reserves

Question 3

What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?

Answer 3

Fair Credit Reporting Act

Question 4

Who elects the governing body of a mutual insurance company?

Answer 4

Policy Holders

Question 5

At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?

Answer 5

Upon Completion of Application

Question 6

Which of these describe a participating life insurance policy?

A. Policyowners are entitled to receive dividends
B. Policyowners pay assessments for company losses
C. Stock companies allow their policyowners to share in any company earnings
D. Policyowners are not entitled to vote for members of the board of directors

Answer 6

Policyowners are entitled to receive dividends

Question 7

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a

Answer 7

Risk Retention group

Question 8

What type of reinsurance contract involves two companies automatically sharing their risk exposure?

Answer 8

Treaty

Question 9

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the

Answer 9

Fair Credit Reporting Act

Question 10

Which of the following requires insurers to disclose when an applicant’s consumer or credit history is being investigated

A. 1959 - Intervention by (SEC) The Securities and Exchange Commission
B. 1970 - Fair Credit Reporting Act
C. 1999 - Financial Services Modernization Act
D. 1945 - The McCarran-Ferguson Act

Answer 10

1970-Fair Credit Reporting Act

Question 11

A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as

Answer 11

a fraternal benefit society

Question 12

Taking receipt of premiums and holding them for the insurance company is an example of

A. Commingling
B. Misappropriation
C. Theft
D. Fiduciary responsibility

Answer 12

Fiduciary responsibility

Question 13

Insurance policies are considered aleatory contracts because

A. they are “take it or leave it” contracts
B. both parties consent to the contract
C. performance is conditioned upon a future occurrence
D. the contract is voidable upon proof of fraud

Answer 13

performance is conditioned upon a future occurrence

Question 14

Which of these is NOT a type of agent authority?

A. Express
B. Implied
C. Principal
D. Apparent

Answer 14

Principal

Question 15

The part of a life insurance policy guaranteed to be true is called a(n)

A. representation
B. exclusion
C. warranty
D. waiver

Answer 15

Warranty

Question 16

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

Answer 16

Unilateral

Question 17

When must insurable interest exist for a life insurance contract to be valid?

Answer 17

Throughout the entire length of the contract

Question 18

Statements made on an insurance application that is believed to be true to the best of the applicant’s knowledge are called

Answer 18

representations

Question 19

When must insurable interest be present in order for a life insurance policy to be valid?

Answer 19

When the application is made

Question 20

What is the consideration given by an insurer in the Consideration clause of a life policy?

Answer 20

Promise to accept an insured’s assignment of benefits

Question 21

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

Answer 21

insurable interest in the proposed insured

Question 22

A life insurance arrangement which circumvents insurable interest statutes is called

Answer 22

Investor-Originated Life Insurance

Question 23

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

Answer 23

The Insured

Question 24

At what point does an informal contract become binding?

Answer 24

When one party makes an offer and the other party accepts that offer

Question 25

What is A warranty

Answer 25

is a statement guaranteed to be true

Question 26

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

A. Aleatory
B. Adhesion
C. Unilateral
D. Consideration

Answer 26

Aleatory

Question 27

Life and health insurance policies are what kind of contracts?

Answer 27

Unilateral contracts

Question 28

In regards to representations or warranties, which of these statements is TRUE?

A. Warranties are statements considered to be true to the best of the applicant’s belief
B. If material to the risk, false representations will void a policy
C. Representations are statements guaranteed to be true in every respect
D. If material to the risk, false representations will NOT void a policy

Answer 28

If material to the risk, false representations will void a policy

Question 29

Which of these is NOT considered to be an element of an insurance contract?

A. the offer
B. acceptance
C. negotiating
D. consideration

Answer 29

Negotiating

Question 30

Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.

Answer 30

Conditional

Question 31

Statements made on an insurance application that are believed to be true to the best of the applicant’s knowledge are called

Answer 31

representations

Question 32

Which arrangements allows one to bypass insurable interest laws?

Answer 32

Investor-Originated Life Insurance

Question 33

Life and health insurance policies are both considered ________ contracts

Answer 33

Unilateral