Test #1 (100 Ques.)

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Xtang0729
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  • 1/100 Questions

    A person has an insurable interest in?

    • A friend
    • A neighbor
    • A business partner
    • A boss
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Insurance Quizzes & Trivia
About This Quiz

TEST #1 (100 ques. ) assesses knowledge in insurance principles such as indemnity, insurable interest, and types of insurers. It is designed for individuals preparing for professional insurance exams, enhancing understanding of key concepts and industry terminology.

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  • 2. 

    What type of plan pays benefits directly to the providers of the medical service on behalf of the subscriber?

    • Comprehensive medical plan

    • Blue cross/blue shield

    • Medicare

    • Medicaid

    Correct Answer
    A. Blue cross/blue shield
    Explanation
    Blue Cross/Blue Shield is a type of plan that pays benefits directly to the providers of the medical service on behalf of the subscriber. This type of plan is known as a health insurance plan, where the insurance company has contracts with specific healthcare providers. When a subscriber receives medical services, Blue Cross/Blue Shield directly pays the providers for the covered services, reducing the out-of-pocket expenses for the subscriber.

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  • 3. 

    A company wanting to do business in Georgia must

    • Meet financial requirements

    • Have a home office located in state

    • Have resident agents

    • Have been in business at least 7 years

    Correct Answer
    A. Meet financial requirements
    Explanation
    To do business in Georgia, a company must meet financial requirements. This means that the company needs to have the necessary financial resources and stability to operate in the state. This requirement ensures that the company has the capability to fulfill its financial obligations and contribute to the economic growth of Georgia. It also helps protect consumers and other businesses from potential financial risks associated with doing business with unstable or financially insecure companies.

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  • 4. 

    An agent’s contract does not expressly grant him the authority to collect premiums after the first premium. However, the agent does so on a regular basis. This continuing authority would be described as?

    • Apparent authority

    • Express authority

    • Presumed authority

    • Implied authority

    Correct Answer
    A. Implied authority
    Explanation
    Implied authority refers to the authority that is not explicitly stated in a contract but is reasonably assumed or inferred based on the agent's actions and the nature of their role. In this scenario, even though the agent's contract does not specifically grant them the authority to collect premiums after the first premium, they continue to do so on a regular basis. This suggests that the agent has implied authority to collect premiums beyond the first one.

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  • 5. 

    If benefits from a hospital expense policy are paid to the insured, it is considered to be a ?

    • Service policy

    • Limited policy

    • Special risk policy

    • Reimbursement policy

    Correct Answer
    A. Reimbursement policy
    Explanation
    If benefits from a hospital expense policy are paid to the insured, it is considered to be a reimbursement policy. This means that the insured pays for the hospital expenses out of pocket and then submits a claim to the insurance company for reimbursement. The insurance company will then review the claim and pay the insured back for the covered expenses. This is different from a service policy, limited policy, or special risk policy, which may provide direct payment to the hospital or have specific limitations or conditions on the benefits provided.

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  • 6. 

    What type of company is able to pass on its losses to its insureds?

    • Assessment

    • Whole life

    • Reciprocal

    • Holding

    Correct Answer
    A. Assessment
    Explanation
    An assessment company is able to pass on its losses to its insureds. This type of company operates on the principle of mutual insurance, where policyholders contribute to a common fund that is used to cover losses. If the company experiences losses, it can assess its insureds to make up for the shortfall. This allows the company to distribute the financial burden of losses among its policyholders, ensuring that no individual policyholder bears the full cost of a loss.

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  • 7. 

    The Supreme Court stated that the Federal Government had the right to regulate the business of insurance, but only when Not regulates by state law. The is an example of?

    • Federal regulation

    • State regulation

    • Self regulation

    • Paul versus Virginia

    Correct Answer
    A. Federal regulation
    Explanation
    This statement reflects the concept of federal regulation. The Supreme Court ruled that the federal government has the authority to regulate the insurance business, but only in cases where it is not already regulated by state law. This means that the federal government can step in and regulate insurance when there is a gap or conflict in state regulations.

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  • 8. 

    The law of Large Numbers can best be described as?

    • The fewer the number of units be considered, the greater the chance of a correct prediction

    • The greater the number of units being considered, the lower the chances of a correct prediction

    • The larger number of insureds that die during a given year, the lower the premium

    • The greater the number of units being considered, the greater the chance for a correct prediction

    Correct Answer
    A. The greater the number of units being considered, the greater the chance for a correct prediction
    Explanation
    The law of Large Numbers states that as the sample size or number of units being considered increases, the more accurate and reliable the predictions or outcomes will be. This is because with a larger sample size, the results are more likely to represent the true population characteristics, reducing the influence of random variation. Therefore, the greater the number of units being considered, the greater the chance for a correct prediction.

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  • 9. 

    The insurance commissioner is required to examine a domestic insurer every ?

    • 1 year

    • 2 years

    • 3 years

    • 4 years

    Correct Answer
    A. 3 years
    Explanation
    The insurance commissioner is required to examine a domestic insurer every 3 years. This means that the commissioner must conduct a thorough review and assessment of the insurer's operations, financial health, and compliance with regulations every three years. This regular examination helps ensure that the insurer is operating in a sound and responsible manner, protecting the interests of policyholders and maintaining the stability of the insurance market.

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  • 10. 

    How often are rating organizations examined?

    • Every 2 years

    • Every 3 years

    • Every 4 years

    • Every 5 years

    Correct Answer
    A. Every 5 years
    Explanation
    Rating organizations are examined every 5 years. This means that every 5 years, these organizations undergo a thorough evaluation to assess their performance, credibility, and adherence to industry standards. This periodic examination ensures that rating organizations are operating effectively and providing accurate and reliable ratings. It also allows for any necessary adjustments or improvements to be made to their processes and methodologies. By conducting these examinations every 5 years, the industry can maintain transparency and confidence in the ratings provided by these organizations.

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  • 11. 

    When an agent accepts an insureds payment, he is acting as a ?

    • Underwriter

    • Fiduciary

    • Insurer

    • Company

    Correct Answer
    A. Fiduciary
    Explanation
    When an agent accepts an insured's payment, they are acting as a fiduciary. A fiduciary is a person who is entrusted with the responsibility to act in the best interest of another party. In this case, the agent is entrusted with the insured's payment and is expected to handle it responsibly and in the insured's best interest. This includes ensuring that the payment is properly allocated, managing any claims or benefits, and providing accurate information and advice to the insured. The agent's role as a fiduciary is essential in maintaining trust and protecting the insured's financial interests.

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  • 12. 

    In order for a contract to be a binding agreement, there must be ?

    • An offer and acceptance

    • An offer only

    • An acceptance only

    • Good faith by at least one party

    Correct Answer
    A. An offer and acceptance
    Explanation
    For a contract to be a binding agreement, there must be an offer and acceptance. An offer is a proposal made by one party to another, indicating their willingness to enter into a contract. Acceptance is the agreement by the other party to the terms of the offer. Both offer and acceptance are essential elements to create a legally enforceable contract. Without an offer, there would be no terms for the other party to accept, and without acceptance, there would be no agreement between the parties. Therefore, both offer and acceptance are necessary for a contract to be binding.

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  • 13. 

    An agent accepts premium payment from applicants and e deposits them in his own person account. The agent is guilty of ?

    • Twisting

    • Rebating

    • Embezzlement

    • Misrepresentation

    Correct Answer
    A. Embezzlement
    Explanation
    The agent is guilty of embezzlement because they are accepting premium payments from applicants and depositing them into their own personal account instead of the appropriate account. Embezzlement involves the misappropriation or theft of funds entrusted to someone's care. In this case, the agent is misusing the funds for their personal gain, which is a clear act of embezzlement.

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  • 14. 

    What is the insuring clause?

    • The company's promise to pay for losses

    • The acceptance of the policy

    • Utmost good faith

    • An offer by the company

    Correct Answer
    A. The company's promise to pay for losses
    Explanation
    The insuring clause refers to the company's promise to pay for losses. This clause is a fundamental part of an insurance policy as it outlines the company's obligation to provide coverage and compensation for any covered losses or damages. It establishes the contractual agreement between the insured and the insurer, ensuring that the insured will be financially protected in the event of a covered loss.

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  • 15. 

    An agent obtains an application from his prospect and forwards the application to the insurance company whiteout the initial premium. The company issues a policy at a standard rare. Who is making the offer?

    • The applicant

    • The insurance company

    • The agent

    • All of the above

    Correct Answer
    A. The insurance company
    Explanation
    The insurance company is making the offer in this scenario. Even though the agent obtained the application and forwarded it to the company, the policy was issued by the company itself. The applicant may have initiated the process by submitting the application, but ultimately it is the insurance company that is making the offer by issuing the policy.

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  • 16. 

    When an insurance company issues a life insurance policy, where would the company show insurance premiums, policy limits and premium mode?

    • The policy face

    • The policy conditions

    • The application

    • The delivery form

    Correct Answer
    A. The policy face
    Explanation
    The correct answer is the policy face. The policy face is a document that contains important information about the insurance policy, including the insurance premiums, policy limits, and premium mode. It is usually located on the first page of the policy and serves as a summary of the key terms and conditions of the policy. Insured individuals can refer to the policy face to quickly access and understand the basic details of their insurance coverage.

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  • 17. 

    All of the following would be costs associated with death, except?

    • Doctor and hospital bills from a final illness or accident

    • Funeral expenses

    • Estate settlement costs

    • Intervivos transfers of assets

    Correct Answer
    A. Intervivos transfers of assets
    Explanation
    Intervivos transfers of assets refer to the transfer of assets between living individuals during their lifetime. This is not a cost associated with death, as it occurs before death. The other options, such as doctor and hospital bills, funeral expenses, and estate settlement costs, are all costs that can be incurred after death.

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  • 18. 

    Two people are equal owners in a business. They wish to protect their assets and provide income for their family in the event of either of their deaths. What should their agent recommend?

    • A family plan

    • Universal life

    • A buy/sell agreement funded with life insurance

    • An intervivos trust

    Correct Answer
    A. A buy/sell agreement funded with life insurance
    Explanation
    A buy/sell agreement funded with life insurance would be the most suitable recommendation for the two equal owners in order to protect their assets and provide income for their family in the event of either of their deaths. This agreement ensures that if one of the owners passes away, the other owner will be able to purchase their share of the business using the life insurance proceeds. This helps to maintain the stability and continuity of the business while also providing financial support for the deceased owner's family.

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  • 19. 

    In order to be eligible for Retirement Benefits under Social Security a person must be fully insured. This means?

    • The worker have earned 40 quarters of coverage

    • The worker must be at least 65 years old

    • The worker must have earned 20 quarters of coverage

    • The worker must have paid taxes for at least 10 years

    Correct Answer
    A. The worker have earned 40 quarters of coverage
    Explanation
    To be eligible for Retirement Benefits under Social Security, a person must be fully insured, which means they must have earned 40 quarters of coverage. This means that the worker must have worked and paid Social Security taxes for a total of 40 quarters, which is equivalent to 10 years. By meeting this requirement, the worker becomes eligible to receive retirement benefits from Social Security.

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  • 20. 

    A high salaried executive is about to receive a $25,000.00 bonus from his company. He doesn’t need the additional income and doesn’t want to pat additional taxes on the bonus. What type on non qualified plan could his employer set up for him?

    • A profit sharing plan

    • A Keogh Plan

    • A deferred compensation plan

    • A defined benefit plan

    Correct Answer
    A. A deferred compensation plan
    Explanation
    A deferred compensation plan could be set up for the high salaried executive to avoid paying additional taxes on the $25,000.00 bonus. This type of plan allows the executive to defer receiving the bonus until a later date, typically after retirement, when they may be in a lower tax bracket. By deferring the income, the executive can potentially reduce their tax liability and avoid immediate taxation on the bonus.

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  • 21. 

    What is the name of the Consumer publication that describes the type of coverage being offered and provides general information to help applicants compare different policies and reach a decision about whether the coverage is appropriate?

    • A buyer's guide

    • An inspection report

    • A policy summary

    • The agent's report

    Correct Answer
    A. A buyer's guide
    Explanation
    A buyer's guide is a consumer publication that provides general information about the type of coverage being offered and helps applicants compare different policies. It is designed to assist consumers in making an informed decision about whether the coverage is suitable for their needs. The buyer's guide offers valuable information that can help individuals understand the terms and conditions of the policy, compare prices and benefits, and ultimately decide whether the coverage is appropriate for them.

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  • 22. 

    In a business situation, a corporation applies for an insurance policy on a key employee. The corporation is the owner and beneficiary of the policy. This kind of arrangement is called?

    • Third part ownership

    • Deferred compensation

    • Insurable interest

    • Reversionart interest

    Correct Answer
    A. Third part ownership
    Explanation
    Third-party ownership refers to a situation where a corporation applies for an insurance policy on a key employee, with the corporation being the owner and beneficiary of the policy. This arrangement allows the corporation to protect its financial interests in the event of the key employee's death. It is called third-party ownership because the corporation is not the insured individual, but rather a separate entity that owns the policy.

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  • 23. 

    A Buy-Sell Agreement is best described as?

    • Business owner who wants to purchase $20,000.00 in municipal bonds

    • A sole proprietor who wants to purchase $20,000.00 in life insurance

    • Three business owners that share equal ownership in the company

    • Agreement to buy a business from another business

    Correct Answer
    A. Three business owners that share equal ownership in the company
    Explanation
    A Buy-Sell Agreement is an agreement between three business owners who share equal ownership in the company. This agreement outlines the terms and conditions for the sale of a business owner's interest in the company in the event of their death, disability, retirement, or any other triggering event. It ensures a smooth transition of ownership and protects the interests of all parties involved.

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  • 24. 

    The definition of Fiduciary is someone who?

    • Does not sell insurance

    • Only sells insurance

    • Markets directly or indirectly insurance products, but doe not collect premiums from clients

    • Markets directly or indirectly insurance products, but does collect premiums from clients

    Correct Answer
    A. Markets directly or indirectly insurance products, but does collect premiums from clients
    Explanation
    A fiduciary is someone who is entrusted with the responsibility of managing assets or making decisions on behalf of another person or entity. In the context of insurance, a fiduciary would market insurance products to clients and also collect premiums from them. This means that they not only promote and sell insurance policies but also handle the financial transactions related to the premiums.

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  • 25. 

    In which of the following scenarios could one pay an extra premium to cover added risk?

    • To cover committing suicide within the first 20 years of the insurance of the policy

    • To cover an injury in the commission of a felony

    • To cover a student pilot who is learning to fly an airplane

    • A businessman who flies a lot for business

    Correct Answer
    A. To cover a student pilot who is learning to fly an airplane
    Explanation
    A student pilot who is learning to fly an airplane is considered to be at a higher risk compared to an experienced pilot. Since the student pilot is still in the learning phase, there is a higher probability of accidents or mistakes occurring during the flight. Therefore, the insurance company may require an extra premium to cover the added risk associated with the student pilot.

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  • 26. 

    The results of an M.I.B. report if coverage is denied, may be reported to be?

    • Applicant, if different than the insured

    • The insured's spouse

    • The insured's physician

    • The agent of record

    Correct Answer
    A. The insured's physician
    Explanation
    If coverage is denied, the results of an M.I.B. report may be reported to the insured's physician. This is because the insured's physician would likely have relevant medical information that could be useful in determining the reason for the coverage denial. The physician's input can help provide a comprehensive understanding of the insured's health status and any pre-existing conditions that may have influenced the decision to deny coverage.

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  • 27. 

    Three business partners enter in to a Cross- Purchase buy/sell agreement. How many policies would be sold?

    • 6

    • 3

    • 4

    • 12

    Correct Answer
    A. 6
    Explanation
    In a Cross-Purchase buy/sell agreement, each partner agrees to purchase a life insurance policy on the lives of the other partners. This means that each partner would need to buy a policy on the lives of the other two partners. Since there are three partners in total, and each partner needs to buy two policies, the total number of policies that would be sold is 6.

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  • 28. 

    A person applied for insurance and paid initial premium at the time of application and received a conditional receipt. It was discovered in underwriting that the applicant had high blood pressure and the insurance company issued a policy, however, at a higher premium. When the agent went to deliver the policy, he learned that applicant was killed in an accident. What will the insurance company do?

    • Return premium payment due t the increased health risk and pay no death benefit

    • Pay the death benefit

    • Pay a reduced death benefit

    • Charge an extrema premium and pay the death benefit

    Correct Answer
    A. Return premium payment due t the increased health risk and pay no death benefit
    Explanation
    The insurance company will return the premium payment due to the increased health risk and will not pay the death benefit. Since the applicant had high blood pressure, the insurance company issued a policy at a higher premium. However, as the applicant passed away before the policy was delivered, the insurance company is not obligated to pay the death benefit. The conditional receipt only guarantees coverage if the applicant is approved and the policy is delivered, which did not happen in this case. Therefore, the insurance company will refund the premium payment.

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  • 29. 

    Which policy would build Cash Value the fastest?

    • 20 pay life

    • 20 year endowment

    • Whole life

    • Term life

    Correct Answer
    A. 20 year endowment
    Explanation
    The 20 year endowment policy would build cash value the fastest compared to the other options. This is because the endowment policy combines elements of both life insurance and savings. It provides coverage for a specific period of 20 years, and if the policyholder survives the term, they receive a lump sum payout. This payout accumulates cash value over time, making it the fastest policy to build cash value. In contrast, the other options such as 20 pay life, whole life, and term life do not typically offer the same level of cash value accumulation.

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  • 30. 

    The period of time after a widow no longer receives survivor’s benefits for her children and before she is eligible for her survivor’s benefit is known as?

    • Blackout period

    • Elimination period

    • Transfer period

    • Probationary period

    Correct Answer
    A. Blackout period
    Explanation
    The period of time after a widow no longer receives survivor's benefits for her children and before she is eligible for her survivor's benefit is known as a blackout period. During this time, the widow does not receive any financial support, creating a temporary gap in her benefits. This period can be challenging as the widow needs to find alternative sources of income until she becomes eligible for her own survivor's benefit.

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  • 31. 

    An applicant for life insurance has an immediate need for life insurance; however, the applicant has limited funds in which to pay premiums. What type of insurance should you recommend?

    • Straight whole life

    • Endowment insurance

    • Term insurance

    • Limited payment whole life

    Correct Answer
    A. Term insurance
    Explanation
    Term insurance would be the most suitable recommendation in this scenario. Term insurance provides coverage for a specific period of time, typically 10, 20, or 30 years. It is generally more affordable compared to other types of life insurance, making it a good option for someone with limited funds. Since the applicant has an immediate need for life insurance, term insurance can provide the necessary coverage at a lower cost, allowing the applicant to allocate their limited funds towards other financial obligations.

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  • 32. 

    Policy delivery means delivery to :

    • The applicant

    • The company

    • The policy owner or his agent

    • The insured

    Correct Answer
    A. The policy owner or his agent
    Explanation
    Policy delivery refers to the process of delivering the policy to the policy owner or their agent. This is important because it ensures that the policy owner receives the necessary documentation and information regarding their insurance policy. By delivering the policy directly to the policy owner or their agent, it allows them to review the terms and conditions, understand their coverage, and address any questions or concerns they may have. Ultimately, policy delivery aims to provide the policy owner with the necessary documentation to ensure they are informed and can make informed decisions regarding their insurance coverage.

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  • 33. 

    The majority of insurance in a family policy s usually on the

    • Children

    • Breadwinner

    • Spouse

    • Beneficiary

    Correct Answer
    A. Breadwinner
    Explanation
    The correct answer is "breadwinner" because in a family policy, the majority of insurance coverage is usually focused on the breadwinner. This is because the breadwinner is typically the main source of income for the family and their loss or inability to work would have a significant financial impact on the family. Therefore, it is important to have insurance coverage to protect against such risks.

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  • 34. 

    The insurance commissioner can issue a license for any of the following , EXCEPT:

    • Counselor

    • Appraiser

    • Non-resident

    • Temporary agent

    Correct Answer
    A. Appraiser
    Explanation
    The insurance commissioner can issue a license for counselors, non-residents, and temporary agents, but not for appraisers. This indicates that appraisers are not authorized or regulated by the insurance commissioner and require a different licensing authority.

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  • 35. 

    Which life insurance policy provision states that the insured has 30 days from the premium due date to make a premium payment?

    • Non forfeiture

    • Grace period

    • Payment of premiums

    • Incontestability

    Correct Answer
    A. Grace period
    Explanation
    The grace period provision in a life insurance policy allows the insured a certain amount of time, typically 30 days, after the premium due date to make a premium payment. During this grace period, the policy remains in force, and the insured is given an opportunity to catch up on missed payments without any penalty or loss of coverage. This provision provides flexibility to policyholders in case they are unable to make the payment on time due to various reasons.

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  • 36. 

    Which of the following is an example of a Limited-Pay policy?

    • Whole life

    • Paid-up at age 65

    • Renewable term to age 70

    • Endowment maturing at age 65

    Correct Answer
    A. Paid-up at age 65
    Explanation
    A Limited-Pay policy is a type of life insurance policy where the premium payments are made for a limited number of years, after which the policy remains in force without any further premium payments required. In this case, the "paid-up at age 65" option is an example of a Limited-Pay policy because the policyholder pays premiums until they reach the age of 65, after which the policy is considered fully paid-up and remains in force without any further premium payments needed.

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  • 37. 

    In a Family Policy, coverage consists of Whole Life on the breadwinner and?

    • Whole life on all other family members

    • Term insurance on all other family members

    • Term insurance based on the number of children

    • Term insurance on the spouse, whole life on the children

    Correct Answer
    A. Term insurance on all other family members
    Explanation
    In a Family Policy, the coverage consists of Whole Life on the breadwinner and term insurance on all other family members. This means that the breadwinner is insured for their entire life, while the rest of the family members are insured for a specific term or period of time. This arrangement ensures that the breadwinner's life is covered indefinitely, while the other family members are protected for a set duration.

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  • 38. 

    What part of the Family Maintenance Policy finances the income protection?

    • Level term

    • Whole life

    • Interest

    • Decreasing term

    Correct Answer
    A. Level term
    Explanation
    The level term part of the Family Maintenance Policy finances the income protection. Level term insurance provides a fixed death benefit and premium amount for a specific period of time. This means that the policyholder's beneficiaries will receive a consistent amount of income protection if the policyholder passes away during the term of the policy. This can help ensure that the family's financial needs are met and provide stability in the event of the policyholder's death.

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  • 39. 

    An applicant wants to purchase a policy on himself and have an income provided for his family to cover the next 20 years. What policy should you recommend?

    • Whole life

    • Decreasing term

    • Family income policy

    • A family policy

    Correct Answer
    A. Family income policy
    Explanation
    A family income policy would be the most suitable recommendation in this scenario. This policy ensures that the applicant's family will receive a regular income for the next 20 years in the event of his death. It provides financial security and support for the family over a specified period, which aligns with the applicant's objective of covering his family's income needs for the next 20 years. Whole life and decreasing term policies may not be as suitable as they do not specifically address the need for income replacement over a fixed period of time.

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  • 40. 

    When are penalties applied and when is it considered late to withdraw an I.R.A.?

    • 65

    • 70 1/2

    • 59 1/2

    • 65 1/2

    Correct Answer
    A. 70 1/2
    Explanation
    Penalties are applied and it is considered late to withdraw an I.R.A. at the age of 70 1/2. At this age, individuals are required to start taking minimum distributions from their traditional IRAs and failing to do so will result in penalties. This age is determined by the Internal Revenue Service (IRS) and is based on the assumption that individuals will have retired by this age and will need to start accessing their retirement savings.

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  • 41. 

    Insurable interest must be evident?

    • When the policy is delivered

    • While the policy is being underwritten

    • At the time the policy is applied for

    • At the time the premium is paid at delivery

    Correct Answer
    A. At the time the policy is applied for
    Explanation
    Insurable interest refers to the financial or legal interest that a person has in the subject matter of an insurance policy. This interest must be present at the time the policy is applied for in order for the policy to be valid. It ensures that the person obtaining the insurance has a legitimate reason to protect against potential losses. Therefore, at the time the policy is applied for is the correct answer as it signifies the importance of having insurable interest at the beginning of the insurance process.

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  • 42. 

    In the event that an insurance company should happen to become insolvent, what will the Guarantee Association are required to pay?

    • 50K

    • 100K

    • 150K

    • 300K

    Correct Answer
    A. 300K
    Explanation
    If an insurance company becomes insolvent, the Guarantee Association is required to pay up to 300K. This means that if the insurance company is unable to fulfill its financial obligations, the Guarantee Association will step in and provide coverage up to the specified amount. This ensures that policyholders are protected and their claims are honored even if the insurance company goes bankrupt.

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  • 43. 

    What is the term use to describe a party intentionally and voluntary give up a known right?

    • Waiver

    • Estoppel

    • Warranty

    • Condition

    Correct Answer
    A. Waiver
    Explanation
    A waiver is the correct term used to describe a party intentionally and voluntarily giving up a known right. When a party waives a right, they are choosing to forgo the benefits or protections that the right would have provided them. This can be done through explicit agreement or through actions that imply the intention to waive the right. Waivers are commonly used in legal and contractual contexts to settle disputes or to modify the terms of an agreement.

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  • 44. 

    Important information that assists the Company Underwriter in determining insurability comes from?

    • M.I.B.

    • Inspection report

    • Applicant's statements on the application

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The Company Underwriter relies on important information from multiple sources to determine insurability. The M.I.B. (Medical Information Bureau) provides valuable data about an applicant's medical history, which helps assess the risk involved. The inspection report provides information about the condition of the property or assets being insured, enabling the underwriter to evaluate potential risks. Lastly, the applicant's statements on the application form provide additional details about their personal circumstances and any potential risks. Considering all of these sources together allows the underwriter to make a comprehensive assessment of insurability.

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  • 45. 

    In a Stock Company, all of the following are true, EXCEPT?

    • Management control rests with the board of directors

    • Stockholders advance money to organize the company

    • Policy holders share in the profits and losses

    • Stockholders share in the profits and losses

    Correct Answer
    A. Policy holders share in the profits and losses
    Explanation
    In a Stock Company, policy holders do not share in the profits and losses. This is because policy holders are typically individuals who purchase insurance policies from the company, and their relationship with the company is different from that of stockholders. While stockholders are the owners of the company and have a financial stake in its success, policy holders are customers who pay premiums for insurance coverage. Therefore, policy holders do not have a direct involvement in the profits and losses of the company.

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  • 46. 

    The terms of the Fair Credit Reporting Act prohibits a consumer reporting agency from supplying all of the following information, except?

    • Bankruptcies less than fourteen years old

    • Suits and judgments over seven years old

    • Paid tax liens over seven years old

    • Criminal convictions over seven years old

    Correct Answer
    A. Bankruptcies less than fourteen years old
    Explanation
    The Fair Credit Reporting Act prohibits a consumer reporting agency from supplying bankruptcies less than fourteen years old. This means that the agency is not allowed to provide information about bankruptcies that occurred within the last fourteen years. However, the agency is allowed to supply information about suits and judgments over seven years old, paid tax liens over seven years old, and criminal convictions over seven years old.

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  • 47. 

    A person attempting to obtain information about another person and pretends to be someone he is not or misrepresents the true purpose of the interview is conduction what?

    • Consumer reports

    • Pretext interviews

    • Investigative consumer reports

    • All of the above

    Correct Answer
    A. Pretext interviews
    Explanation
    A person attempting to obtain information about another person and misrepresenting their true purpose of the interview is conducting pretext interviews. This involves pretending to be someone else or using deceptive tactics to gather information. It is a form of investigative technique used to gather information covertly.

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  • 48. 

    An insurance institution or agent must provide a notice of information practices to all applicants                ?

    • No later than at the time the collection of personal information begins

    • When the policy is delivered

    • It's not necessary to do

    • At the time of claim

    Correct Answer
    A. No later than at the time the collection of personal information begins
    Explanation
    The correct answer is "no later than at the time the collection of personal information begins" because it is important for an insurance institution or agent to inform applicants about their information practices before collecting any personal information. This allows applicants to make an informed decision about sharing their personal information and ensures transparency in the insurance process.

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  • 49. 

    The accounting measure used by insurance companies to cover the insurer’s liabilities to the Policyholders?

    • Surplus

    • Dividend

    • Reserve

    • Risk

    Correct Answer
    A. Reserve
    Explanation
    Insurance companies use reserves as an accounting measure to cover their liabilities to policyholders. Reserves are funds set aside by insurers to ensure that they have enough money to pay out claims and fulfill their obligations to policyholders. These reserves act as a financial cushion and provide a safety net for the company in case of unexpected losses or a high number of claims. By maintaining adequate reserves, insurance companies can demonstrate their financial stability and ability to meet their policyholders' needs.

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Quiz Review Timeline (Updated): Mar 20, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 05, 2014
    Quiz Created by
    Xtang0729

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