Life & Health - Practice Exam 3

150 Questions | Total Attempts: 37

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Practice Exam Quizzes & Trivia

Life & Health - Practice Exam 3


Questions and Answers
  • 1. 
    Which of the following is not an example of what an insurance policy can provide an insured ?
    • A. 

      Help protect from the possibility of a loss.

    • B. 

      Reduce the uncertainity of financial loss

    • C. 

      Eliminate the risk of sickness

    • D. 

      Replace a large possible loss with that of a small certain loss (Premium).

  • 2. 
    Select from the choices below the best description of a speculative risk.
    • A. 

      Insuring someone over the age of 90

    • B. 

      Involving the possibility of a gain in addition to the uncertainty of loss

    • C. 

      Insuring against a situation that offers no possibility of gain

    • D. 

      The purchase of an insurance policy to protect from gambling losses

  • 3. 
    The best description of a hazard is a/an:
    • A. 

      Condition that may increase the chance that a loss may occur

    • B. 

      Cause of a loss

    • C. 

      Pure risk

    • D. 

      Uncertainty of a financial loss

  • 4. 
    Intentionally submitting false information on a life application is an example of a moral hazard.
    • A. 

      True

    • B. 

      False

  • 5. 
    The owner of an office building recognizes the hazards of the building because of its age.  He decides to finally get insurance to protect him from a possible legal suit.  this would be an example of avoidance of risk.
    • A. 

      True

    • B. 

      False

  • 6. 
    Choose from the following selections the best description of a premium.
    • A. 

      Funds received by an insured from an insurer to realize the benefits of the policy.

    • B. 

      Funds received by an insurer from an insured to realize the benefits of the policy.

    • C. 

      A bonus paid to an agent for high insurance sales production.

    • D. 

      The amount an insured pays for each unit of coverage. $7 for every $1,000 of coverage is an example.

  • 7. 
    Which of these is the best way to define the concept of "indemnity ?"
    • A. 

      It's only when concealed facts are material that an insurer can rescind or cancel a policy.

    • B. 

      Only the insurance company makes a legally enforceable promise.

    • C. 

      An insured cannot receive more than an actual economic loss in the event of a claim

    • D. 

      If there is an unclear statement in a contract of insurance the courts will rule in favor of the insured.

  • 8. 
    The principle of indemnification is best described below as:
    • A. 

      Protecting from any past legal situation.

    • B. 

      A hazard not specifically defnied in the code.

    • C. 

      A form of insurance that insurance companies buy to decrease exposure from investment losses

    • D. 

      Restoring an individual to a condition they enjoyed in the past, thus making them whole

  • 9. 
    When is insurable interest required to exist with a life insurance policy ?
    • A. 

      At the time of death.

    • B. 

      At the time the policy is written but not at the time of death.

    • C. 

      At the time the policy is written and at the time of death.

    • D. 

      At all times during the policy life.

  • 10. 
    All the following statements regarding policy dividends are true except:
    • A. 

      Non-participating policies generally pay large dividends.

    • B. 

      Dividends cannot be guaranteed

    • C. 

      Not all dividends are taxable

  • 11. 
    Sam's insurance policy pays a dividend.  the agent that sold Sam the policy refers to the shareholders of the company as "participating", therefore it is a(n) ______________insurer.
    • A. 

      Assessment

    • B. 

      Foreign

    • C. 

      Stock

    • D. 

      Mutual

  • 12. 
    Which of the following would be considered an alien insurer ?
    • A. 

      An unauthorized company that underwrites undocumented workers.

    • B. 

      A company located in England and doing business in California

    • C. 

      A company that is organized in Nevada but maintains branch offices in this state.

    • D. 

      All the above are alien insurers.

  • 13. 
    Julie is a licensed insurance salesperson who represents the Silver Dollar Insurance Company.  If you were to look at the front of her office you would see a sign that reads: SILVER DOLLAR INSURANCE COMPANYJulie Insurance AgencyIf Julie performs acts that are not specifically named in the written contract she has the Silver Dollar she is exercising her _____________authority.
    • A. 

      Principal

    • B. 

      Implied

    • C. 

      Express

    • D. 

      All the above

  • 14. 
    Agents must act on behalf of their clients in such a way that uphold their "fiduciary duty".  Select the best emple of this duty from the choices below.
    • A. 

      Assuring a claim form is forwarded to the insurer in a timely manner.

    • B. 

      Reviewing the insurance needs and coverage for a client periodically.

    • C. 

      Quickly sending an insured's premium to the home office.

    • D. 

      Assisting a client to choose the best policy for their situation

  • 15. 
    The Fair Credit Reporting Act mandates that a credit reporting company responds to a consumer complaint when that company's credit report inaccurately reflects information about the consumer.
    • A. 

      True

    • B. 

      False

  • 16. 
    In the process of applying for insurance an applicant is asked questions that do not relate to underwriting but are clearly meant for attaining marketing information.  Under the code this practice is allowable assuming the person aplying for coverage is informed of such practices.
    • A. 

      True

    • B. 

      False

  • 17. 
    The term "consideration" applies to the issuance of an insurance policy.  Choose the best description of this term from the choices below.
    • A. 

      The amount of death benefit.

    • B. 

      The time the underwriting department gives the application.

    • C. 

      The face amount of the policy one year from the date of issue.

    • D. 

      None of the above

  • 18. 
    The doctrine of "utmost good faith" applies to the business of transacting insurance.  Which of the following is an example of its application ?
    • A. 

      Each party is entitled to rely upon the representations of the other party.

    • B. 

      Answers to application questions are provided to the best of one's knowledge.

    • C. 

      Each party to a contract must give valuable consideration.

    • D. 

      Any unclear or ambiguous statement in a contract of insurance is decided in favor of the insured.

  • 19. 
    Fraud is an intentional act to deceive and induce another to part with something of value.  Which of the following would describe fraud in the process of applying for insurance ?1. intentionally distorting the truth to get an insurance policy 2. making a misrepresentation that has no material effect and displays no intent to lie.
    • A. 

      1 only

    • B. 

      2 only

    • C. 

      Both 1 and 2

    • D. 

      Neither 1 nor 2

  • 20. 
    Choose the correct answer.  The California Insurance Code: 1. includes laws and regulations the Commissioner has issued. 2. is basically the body of laws governing insurance business in this state. 3. is broken into five sections.  They are: life, health, personal lines, commercial property and commercial liability insurance.
    • A. 

      1 only

    • B. 

      2 only

    • C. 

      1 and 3

    • D. 

      1, 2 and 3

  • 21. 
    The Commissioner has numerous responsibilities and wide-ranging authority concerning the California Insurance Code.  Should he deem it necessary, he can rewrite certain sections of the code to better serve the insuring public.
    • A. 

      True

    • B. 

      False

  • 22. 
    Which of the following is required to be included in the writing of an insurance contract ?
    • A. 

      The parties between whom the contract is made

    • B. 

      The risks insured against

    • C. 

      The period in which the insurance is to continue

    • D. 

      All the above

  • 23. 
    Neglecting to communicate that which a party knows, and ought to communicate, so that the other party may make a sound decision is known as:
    • A. 

      Concealment

    • B. 

      Material information

    • C. 

      Boycotting

    • D. 

      None of the above

  • 24. 
    From the following, identify that which applies to an applicant's misstatement on an application for insurance. 1. Should the misstatement be made with express intent to mislead the insurer it is considered fraud. 2. Should the misstatement not be material to the Company's decision it may not affect the application.
    • A. 

      1 only

    • B. 

      2 only

    • C. 

      1 and 2

  • 25. 
    All of the following statements are correct regarding a "warranty" except:
    • A. 

      It is a statement merely made to the best of one's knowledge, and can only be express.

    • B. 

      Should either party violate a warranty it entitles the other party to cancel the contract.

    • C. 

      Warranties can be made about events in the past, present or future.

    • D. 

      Warranties made at or during the execution of a policy must be contained in the policy, signed by the insured and attached to the contract