Section 1 - Basic Principles

Question 1

Insurance is not characterized as which of the following?
-Transference of risk
-Pooling of premium dollars
-Method of risk management
As the number of insureds increase the number of losses decrease

Answer 1

As the number of insureds increase the number of losses decrease

Question 2

Which group is the Do Not Call Registry designed to protect AGAINST?
-telemarketers
-Charities
-Political organizations
-Relatives

Answer 2

Telemarketers

Question 3

Dividends from a stock insurance company are normally sent to
-Beneficiaries
-Shareholders
-Policy owners
-Insureds

Answer 3

Shareholders

Question 4

What is the accounting measurement of an insurance company’s future obligations to its policy owners?
Credits
Reserves
Surplus account
Retention fund

Answer 4

Reserves

Question 5

Which reinsurance contract between two insurers involves an automatic sharing of the risk assumed?
Arbitrage reinsurance
Facultative reinsurance
Excess reinsurance
Treaty reinsurance

Answer 5

Treaty reinsurance

Question 6

Which of the following outlines the authority given to the producer on behalf of the insurer?
Rebating arrangement
CoMingling contract
Controlled business clause
Producer contract

Answer 6

Producer contract

Question 7

Who regulates an insurer claim settlement practices?

Answer 7

State insurance departments

Question 8

What is a syndicate established by a group of insurer to share underwriting duties?

Answer 8

Lloyd’s organization

Question 9

A stock insurance company is owned by its…

Answer 9

Shareholders

Question 10

What financial product creates an instant estate, no matter when the date of death?

Answer 10

Life insurance