New York Life Insurance
Life insurance is the provision of cover by an insurance company to compensate you on occurrences of life risks. New York Life Insurance is a lengthy quiz on the subject. All the best as you test and advance your knowledge.
Questions and Answers
- 1.
A legal representative of an insurance company
Explanation
The correct answer is "Producer, Agent." In the insurance industry, a legal representative of an insurance company can be referred to as both a producer and an agent. These terms are often used interchangeably to describe individuals who sell insurance policies on behalf of the insurance company. They are responsible for understanding the insurance products, advising clients on suitable coverage options, and facilitating the purchase of insurance policies.Rate this question:
- 2.
_____________ is the person covered by the insurance company.
Explanation
The term "insured" refers to the person who is protected or covered by an insurance company. This individual has purchased an insurance policy and is entitled to receive benefits or compensation in the event of a covered loss or damage. The term "insured" can be used in both uppercase and lowercase letters, and it is commonly used in insurance contracts and policies to identify the person for whom the coverage is provided.Rate this question:
- 3.
________ is the uncertainty or chance of a loss occurring.
Explanation
The term "risk" refers to the uncertainty or probability of a loss happening. It can be used to describe the potential for negative outcomes or harm in various situations. In this context, "risk" and "risk" both represent the correct answer to the question, as they both accurately define the concept of uncertainty or chance of a loss occurring.Rate this question:
- 4.
____________ loss is defined as the reduction, or disappearance of value of the person or property insured in a policy, caused by a named peril.
Explanation
Loss is defined as the reduction, or disappearance of value of the person or property insured in a policy, caused by a named peril. Loss refers to the financial or material harm suffered by the insured due to an event covered by the insurance policy. This can include damage, destruction, or theft of the insured person or property. Loss is a fundamental concept in insurance, as it is the basis for determining the compensation or reimbursement that the insured is entitled to receive from the insurance company.Rate this question:
- 5.
Insurance provide a means to transfer loss.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Insurance provides a means to transfer loss by allowing individuals or businesses to transfer the financial risk of potential losses to an insurance company. In exchange for paying a premium, the insurance company agrees to bear the financial burden of certain types of losses, such as property damage, medical expenses, or liability claims. This transfer of risk helps protect individuals and businesses from significant financial hardship in the event of an unexpected loss. Therefore, the statement "Insurance provides a means to transfer loss" is true.Rate this question:
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- 6.
In life insurance, what protects survivors from losses suffered after an insured's death.
- A.
Peril
- B.
Policy
- C.
Whole Life
- D.
Risk
Correct Answer
B. PolicyExplanation
In life insurance, a policy is what protects survivors from losses suffered after an insured's death. A life insurance policy is a contract between the insured and the insurance company that provides a sum of money, known as the death benefit, to the beneficiaries upon the insured's death. The policy outlines the terms and conditions of the coverage, including the amount of coverage, premium payments, and any exclusions or limitations. Therefore, the correct answer is "Policy."Rate this question:
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- 7.
Different types of risk.
- A.
Pure
- B.
Speculative
- C.
Moral
- D.
Prune
Correct Answer(s)
A. Pure
B. SpeculativeExplanation
The given answer includes the terms "Pure" and "Speculative" as the different types of risk. Pure risk refers to situations where there is only a chance of loss or no loss at all, such as accidents or natural disasters. Speculative risk, on the other hand, involves the possibility of both gain and loss, typically associated with investments or gambling. The terms "Moral" and "Prune" are not recognized types of risk and are not included in the answer.Rate this question:
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- 8.
Insurance companies are willing to accept _________ risk.
Correct Answer(s)
PureExplanation
Insurance companies are willing to accept pure risk. Pure risk refers to the type of risk that involves only the possibility of loss or no loss at all, with no potential for gain. This is the type of risk that insurance companies are designed to cover. By accepting pure risk, insurance companies provide coverage and protection to individuals or businesses against potential losses, such as damage to property, accidents, or illness. Accepting pure risk allows insurance companies to offer policies and collect premiums, thereby spreading the risk among a larger pool of policyholders.Rate this question:
- 9.
An example of ______________ risk is gambling.
Correct Answer(s)
Speculative
speculativeExplanation
Speculative risk refers to a situation where the outcome is uncertain and there is a possibility of both gain and loss. Gambling is a classic example of speculative risk because the outcome is uncertain and there is a chance of winning or losing money. In gambling, individuals willingly take on the risk of losing their money in the hopes of gaining more. Therefore, the term "speculative" accurately describes the risk associated with gambling.Rate this question:
- 10.
___________ are conditions or situations that increase the probability of an insured loss occurring.
Correct Answer(s)
hazards
HazardsExplanation
Hazards are conditions or situations that increase the probability of an insured loss occurring. They can be natural, such as earthquakes or floods, or man-made, such as fires or theft. Hazards can also include factors like poor maintenance or inadequate security measures. Identifying and understanding hazards is crucial for insurance companies to assess risk and determine appropriate premiums. By recognizing hazards, insurers can take steps to mitigate them and reduce the likelihood of losses for policyholders.Rate this question:
- 11.
The causes of loss insured against in an insurance company are called perils.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because perils refer to the specific events or circumstances that can cause damage or loss to the insured property. These perils can include natural disasters like fires, floods, or earthquakes, as well as man-made events such as theft or vandalism. Insurance companies provide coverage against these perils, which means they will compensate the policyholder for any losses incurred due to these specified risks. Therefore, the causes of loss insured against in an insurance company are indeed called perils.Rate this question:
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- 12.
Life insurance insures against the financial lost caused by the mature death of the insured.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
against premature death of the insuredRate this question:
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- 13.
___________ means eliminating exposure to a loss.
Correct Answer
avoidanceExplanation
one of the methods of dealing with risk is avoidance.Rate this question:
- 14.
Law firms practice ____________ because of the expense of malpractice insurance.
Correct Answer
sharing
SharingExplanation
Law firms practice sharing because of the expense of malpractice insurance. This means that they distribute the cost of malpractice insurance among all the members of the firm. By sharing the cost, each individual lawyer is able to contribute a smaller amount, making it more affordable for everyone. This practice helps to mitigate the financial burden of malpractice insurance for law firms and ensures that all members are protected in case of any claims or lawsuits.Rate this question:
- 15.
The safest and most common method of transferring risk is to __________ insurance coverage.
Correct Answer
Purchase
purchaseExplanation
The correct answer for this question is "purchase". Purchasing insurance coverage is the safest and most common method of transferring risk. By purchasing insurance, individuals or businesses transfer the financial burden of potential losses to an insurance company. In exchange for paying premiums, the insurance company agrees to provide compensation or coverage in the event of specified risks or losses. Therefore, purchasing insurance coverage is a proactive and effective way to protect against potential risks and mitigate financial losses.Rate this question:
- 16.
The most effective way to handle risk is to transfer it so that the loss is borne by another insurance company.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Transferring risk to another insurance company is indeed the most effective way to handle risk. By doing so, the responsibility for any potential losses is shifted to the insurance company, reducing the financial burden on the individual or organization. This allows for greater peace of mind and protection against unforeseen events.Rate this question:
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- 17.
Insurance policies usually include coverage for loss caused by war or nuclear events.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
excludes coverage.Rate this question:
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- 18.
The _______________ states that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be. This law forms the basis for statistical prediction of loss upon which insurance rates are calculated.
- A.
Law of insurance
- B.
Law of large numbers
- C.
Law of whole life
- D.
Law of pure risk
Correct Answer
B. Law of large numbersExplanation
The Law of Large Numbers states that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be. This means that as the number of people in a risk pool increases, the average loss experienced by the group becomes more accurate and stable. Insurance companies rely on this law to calculate insurance rates, as it allows them to estimate the likelihood and cost of potential losses based on statistical data from a large population.Rate this question:
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- 19.
_________________ companies are own by the policyowners and issue participating policies.
- A.
Marketing
- B.
Life
- C.
Mutual
- D.
Lloyds
Correct Answer
C. MutualExplanation
Mutual companies are owned by the policyowners and issue participating policies. This means that policyholders have a say in the company's decisions and can receive dividends or other forms of profit sharing. Mutual companies operate on a cooperative basis, with the goal of providing benefits to their policyholders rather than maximizing profits for shareholders. Therefore, it is logical to conclude that mutual companies issue participating policies, as these policies allow policyholders to share in the company's profits.Rate this question:
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- 20.
Fraternal association sell only to their members and are considered charitable institutions, they are not subject to all of the regulations that apply to the insurers that offer coverage to the public at large.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Fraternity says we will give only our members insurance.Rate this question:
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- 21.
_______________ provides support for underwriters or groups of individuals that accept insurance risk. They operate exclusively in the property insurance field.
- A.
Riders
- B.
Lloyds
- C.
Term life
- D.
Brokers
Correct Answer
B. LloydsExplanation
Lloyds provides support for underwriters or groups of individuals that accept insurance risk. They operate exclusively in the property insurance field.Rate this question:
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- 22.
Before insurers may transact business in a specific state, they must apply for a license or __________________.
Correct Answer
certificate of authorityExplanation
Insurers are required to obtain a license or certificate of authority before they can conduct business in a particular state. This ensures that they meet the necessary legal and regulatory requirements to operate as an insurance company in that state. The certificate of authority serves as proof that the insurer has been authorized by the state's insurance department to transact business and provide insurance coverage to residents of that state. It is a crucial step in the process of becoming a licensed insurer and allows the company to legally operate and sell insurance policies within the state.Rate this question:
- 23.
Insurance companies are classified according to the _____________________ (domicile).
Correct Answer
location of incorporationExplanation
Insurance companies are classified according to their location of incorporation, which refers to the jurisdiction where the company is legally registered and established. This classification is important because it determines the regulatory framework and laws that govern the company's operations. The location of incorporation also affects the company's ability to conduct business in different regions and countries, as it must comply with the regulations of each jurisdiction where it operates. Therefore, understanding the location of incorporation is essential in assessing the legal and regulatory environment in which an insurance company operates.Rate this question:
- 24.
A ______________ insurer is an insurance company that is incorporated in this state.
- A.
Foreign
- B.
Alien
- C.
Domestic
- D.
All above
Correct Answer
C. DomesticExplanation
A domestic insurer is an insurance company that is incorporated in the state in question. This means that the company is based and operates within the state, as opposed to being based in another state or country. Therefore, it is the correct answer because it accurately describes an insurance company that is incorporated within the state.Rate this question:
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- 25.
A __________________ insurer is an insurance company that is incorporated in another state or territorial possession.
- A.
Foreign
- B.
Alien
- C.
Domestic
- D.
A and B
Correct Answer
A. ForeignExplanation
A foreign insurer refers to an insurance company that is incorporated in a state or territorial possession other than the one in which it is operating. This means that the company is based outside of the state or territory where it conducts its business. In contrast, a domestic insurer is incorporated in the same state or territory where it operates. Therefore, the correct answer is "Foreign."Rate this question:
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- 26.
An ____________ insurer is an insurance company that is incorporated outside of the United States.
Correct Answer
alienExplanation
An alien insurer is an insurance company that is incorporated outside of the United States. This means that the company is based in a foreign country and operates under the laws and regulations of that country. Alien insurers may provide coverage for individuals or businesses in the United States, but they are subject to different regulatory requirements compared to domestic insurers. It is important for individuals and businesses to understand the differences between domestic and alien insurers when purchasing insurance policies.Rate this question:
- 27.
________________ is a contract under which one insurance company indemnifies another insurance company for part or all of its liabilities.
Correct Answer
ReinsuranceExplanation
Reinsurance is a contract between two insurance companies where one company agrees to compensate the other for a portion or all of its liabilities. This allows the insurer to transfer some of the risk it has assumed to another company, reducing its potential losses and ensuring its financial stability. Reinsurance is a common practice in the insurance industry to manage risk and protect against catastrophic events or large claims.Rate this question:
- 28.
______________ authority is the authority a principal intends to grant to an gaent by means of the agents contract. It is the authority that is written in the contract.
Correct Answer
Express
expressExplanation
The term "express" refers to the specific authority that a principal intends to grant to an agent through their contract. This authority is explicitly written and stated in the contract, leaving no room for ambiguity or interpretation. The use of "express" in both uppercase and lowercase suggests that it is the correct answer.Rate this question:
- 29.
An authority that is suggested or unwritten.
- A.
Implied
- B.
Apparent
- C.
Express
- D.
B alone
Correct Answer
A. ImpliedExplanation
Implied means that something is suggested or understood without being directly stated. In the context of the question, an authority that is implied refers to a form of authority that is not explicitly written or stated, but is understood or assumed. This could refer to an authority that is based on tradition, customs, or unspoken rules. Therefore, the correct answer is "Implied".Rate this question:
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- 30.
___________________ authority is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
- A.
Express
- B.
Apparent
- C.
Implied
- D.
Unwritten
Correct Answer
B. ApparentExplanation
Apparent authority refers to the appearance or assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. It is the authority that is perceived by others, even though it may not have been explicitly granted. This can occur when the principal allows someone to act on their behalf or gives the impression that they have the power to do so. Therefore, the correct answer is "Apparent."Rate this question:
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- 31.
A _______________ is someone in a position of trust.
Correct Answer
fiduciaryExplanation
A fiduciary is someone who is entrusted with a position of trust, typically in a financial or legal capacity. They are expected to act in the best interests of the person or entity they are representing and to avoid any conflicts of interest. Fiduciaries have a legal and ethical duty to prioritize the needs and well-being of those they serve, making them reliable and trustworthy individuals in their respective roles.Rate this question:
- 32.
A _______________ is an agreement between two or more parties enforceable by law.
Correct Answer
contractExplanation
A contract is a legally binding agreement between two or more parties. It outlines the rights and obligations of each party involved and can be enforced by law. Contracts are used in various situations, such as business transactions, employment agreements, and purchase agreements, to ensure that all parties involved fulfill their agreed-upon responsibilities.Rate this question:
- 33.
What are the four essential elements in order for insurance to be legally binding?
- A.
Patience
- B.
Consideration
- C.
Competent parties
- D.
Legal purpose
- E.
Agreement
- F.
Law
Correct Answer(s)
B. Consideration
C. Competent parties
D. Legal purpose
E. AgreementExplanation
The four essential elements for insurance to be legally binding are consideration, competent parties, legal purpose, and agreement. Consideration refers to the exchange of something of value between the insured and the insurer, such as the payment of premiums. Competent parties means that both parties involved in the insurance contract must have the legal capacity to enter into a contract. Legal purpose states that the insurance contract must be for a lawful objective. Finally, agreement signifies that both parties must agree to the terms and conditions of the insurance contract.Rate this question:
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- 34.
___________________ takes place when an underwriter employed by the insurer approves the application and issues a policy.
Correct Answer(s)
acceptance
AcceptanceExplanation
Acceptance refers to the process where an underwriter employed by the insurer reviews the application and agrees to provide coverage by issuing a policy. It signifies that the insurer has accepted the applicant's request for insurance and is willing to provide the requested coverage. This step is crucial in the insurance process as it marks the formal agreement between the insurer and the insured, ensuring that the policy is in effect and the insured is protected.Rate this question:
- 35.
The binding force in any contract is the ______________.
Correct Answer(s)
considerationExplanation
Consideration is the binding force in any contract. Consideration refers to something of value that is exchanged between the parties involved in a contract. It can be in the form of money, goods, services, or even a promise to do or not to do something. Consideration is essential for a contract to be legally enforceable, as it demonstrates that both parties have bargained and agreed upon the terms of the contract. Without consideration, a contract would lack the necessary element of mutual obligation and would not be legally binding.Rate this question:
- 36.
A contract without a legal purpose is considered _____________, and cannot be enforced by any party.
Correct Answer(s)
voidExplanation
A contract without a legal purpose is considered void, meaning it is invalid and cannot be enforced by any party. This means that the contract lacks the necessary legal elements or is against public policy. Without a legal purpose, the contract does not have any legal effect and cannot be legally binding.Rate this question:
- 37.
Insurance contracts are aleatory, which means there is an exchange of unequal amounts or values.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Insurance contracts are considered aleatory because there is an exchange of unequal amounts or values between the insured and the insurer. This means that the insured pays a premium to the insurer, which is typically a smaller amount compared to the potential benefits or coverage that the insured may receive in the event of a covered loss or claim. The amount of the potential benefits is uncertain and dependent on the occurrence of a specific event, such as an accident or damage. Therefore, the exchange of values in insurance contracts is not equal, making the statement "Insurance contracts are aleatory" true.Rate this question:
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- 38.
In general, an insurance contract is a public contract because it is between you and everyone in the insurance company.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
it is a personal contract because it is between the insurance company and an individual.Rate this question:
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- 39.
A contract of adhesion is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured). Insurance contract is offer on a take-it or leave-it basis by an insurer.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because a contract of adhesion is a type of contract where one party (in this case, the insurer) prepares the contract and the other party (the insured) has the option to either accept or reject it. In this situation, the insurance contract is offered on a take-it or leave-it basis, meaning the insured does not have the ability to negotiate or make changes to the terms of the contract.Rate this question:
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- 40.
In a _______________ contract only one of the parties to the contract is legally bound to do anything.
- A.
Unilateral
- B.
Conditional
- C.
Personal
- D.
Aleatory
Correct Answer
A. UnilateralExplanation
A unilateral contract is a type of contract where only one party is legally obligated to fulfill their obligations. In this type of contract, one party makes a promise or offer, and the other party can accept or reject it without any legal consequences. Once the accepting party performs the required action, the contract is considered binding, and the offering party is then obligated to fulfill their part of the agreement.Rate this question:
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- 41.
________________ is is the legal term for the intentional withholding of information of a material fact which is crucial in making a decision.
- A.
Rcscission
- B.
Fraud
- C.
Concealment
- D.
Waiver
Correct Answer
C. ConcealmentExplanation
Concealment is the legal term for intentionally withholding information of a material fact that is crucial in making a decision. This means that someone deliberately hides or fails to disclose important information that could impact the decision-making process. In legal contexts, concealment is considered a form of fraud because it involves deceit and can lead to unfair or harmful outcomes.Rate this question:
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- 42.
________________ is the intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party.
- A.
Fraud
- B.
Concealment
- C.
Estoppel
- D.
None above
Correct Answer
A. FraudExplanation
Fraud is the correct answer because it refers to the intentional misrepresentation or concealment of a material fact with the purpose of deceiving or cheating another party. In the context of contracts, fraud can be used to induce someone to enter into a contract or to prevent them from doing so. It involves intentionally providing false information or hiding important facts in order to gain an unfair advantage or cause harm to the other party.Rate this question:
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- 43.
__________________ is the voluntary act of relinquishing a legal right, claim or privilege.
Correct Answer
Waiver
waiverExplanation
Waiver refers to the voluntary act of giving up or surrendering a legal right, claim, or privilege. It involves a conscious decision to forego a particular entitlement or exemption. Whether written or verbal, a waiver is a formal agreement that releases one party from certain obligations or responsibilities. In this context, both "Waiver" and "waiver" are correct answers as they represent the same concept of relinquishing a legal right or privilege.Rate this question:
- 44.
Estoppel is a legal consequence to a waiver.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Estoppel is a legal principle that prevents a person from denying or contradicting a previous statement or action they have made if it would be unfair to allow them to do so. It is often used in contract law to prevent one party from going back on a promise or representation they have made. In this context, estoppel can be seen as a consequence or result of a waiver. When a person waives their rights or claims, they may be estopped from later asserting those rights or claims if it would be unfair to the other party. Therefore, the statement that estoppel is a legal consequence to a waiver is true.Rate this question:
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- 45.
The purchase of life insurance creates an immediate estate.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When someone purchases life insurance, they are essentially creating an immediate estate. This means that upon their death, the insurance policy will pay out a sum of money to their designated beneficiaries. This payout becomes a part of their estate and can be used to cover expenses such as debts, funeral costs, or provide financial support to their loved ones. Therefore, the statement "The purchase of life insurance creates an immediate estate" is true.Rate this question:
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- 46.
The time period during which an annuitant contributes to an annuity is called
- A.
The annuity appreciation
- B.
The accumulation period
- C.
The deferred growth
- D.
The savings period
Correct Answer
B. The accumulation periodExplanation
The correct answer is the accumulation period. This refers to the time period in which an annuitant contributes to an annuity. During this period, the annuity grows through regular contributions and potential investment gains. At the end of the accumulation period, the annuitant can start receiving regular payments from the annuity.Rate this question:
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- 47.
An individual inherit a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet this need.
- A.
Immediate
- B.
Flexible premium
- C.
Deferred
- D.
Variable
Correct Answer
C. DeferredExplanation
A deferred annuity would best meet the individual's need for a guaranteed income after retirement. With a deferred annuity, the individual can invest the inherited money and let it grow over time until they reach retirement age. At that point, they can start receiving regular payments from the annuity, providing a guaranteed income. This allows the individual to maximize the growth potential of the inherited money and ensure a steady stream of income during retirement.Rate this question:
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- 48.
An annuity that guarantees a minimum rate of return is known as a/an
- A.
Immediate annuity
- B.
Variable annuity
- C.
Fixed annuity
- D.
Deferred annuity
Correct Answer
C. Fixed annuityExplanation
A fixed annuity guarantees a minimum rate of return because it offers a fixed interest rate for a specific period of time. This means that regardless of market fluctuations or changes in interest rates, the annuity holder will receive a guaranteed minimum return on their investment. This provides stability and predictability for individuals who prefer a consistent and reliable income stream.Rate this question:
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- 49.
Annuities may be purchased with all of the following payment methods except
- A.
Single
- B.
Level
- C.
Flexible
- D.
Deferred
Correct Answer
D. DeferredExplanation
Annuities may be purchased with single, level, and flexible payment methods, but not with deferred payment method. Deferred annuities are designed to delay the payments until a later date, usually after a certain period of time or until retirement. This allows the annuity to accumulate more funds and potentially provide a higher payout in the future. However, the other payment methods involve immediate or regular payments, making deferred the exception in this case.Rate this question:
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- 50.
An annuity begins payments to the annuitant one month after it is purchased. What type is it?
- A.
Single premium immediate annuity
- B.
Level premium annuity
- C.
Single premium deferred annuity
- D.
Flexible premium deferred annuity
Correct Answer
A. Single premium immediate annuityExplanation
An annuity that begins payments to the annuitant one month after it is purchased is classified as a single premium immediate annuity. This type of annuity requires a lump sum payment upfront and provides immediate income payments to the annuitant. It does not involve any ongoing premiums or a deferral period before payments start.Rate this question:
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Mar 21, 2023Quiz Edited by
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Feb 19, 2013Quiz Created by
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