Life and Health Insurance Exam 1 Questions with 100% Verified Correct Answers UNIT 1: The term used to describe the individual who is covered by the insurance is
- insurer
- insured
- policyowner
- risk - Correct Answer B
Which of the following is a risk?
- A car may need to have new brakes installed after several years of regular driving.
- An individual may need medical attention after slipping on the ice and falling.
- Both are examples of risk.
- Neither is an example of risk. - Correct Answer B
The estimation of future losses is more accurate when information is from
- a small select group
- a large group
- a medium-sized group
- any size group; group size does not matter - Correct Answer A
The application of the law of large numbers enables insurers to
- estimate the future losses of a class or group of people
- predict the future losses of speci c individuals
- charge higher premiums for insurance
- calculate mortality charges - Correct Answer B
Which type of policy is designed to protect against the risk of living too long?
- Casualty
- Life
- Annuity
- Medical expense - Correct Answer C
Which of the following is a type of insurance company owned by its shareholders?
- Mutual B. Stock
- Lloyd's D. Reinsurer - Correct Answer B
The ZYX Insurance Company is incorporated in Alabama. While doing business in Texas, it is
- adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - Correct Answer B
The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas, it is
- adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - Correct Answer C
Self-insurance is an example of which method of handling risk?
- Acceptance B. Transference C. Avoidance D. Reduction - Correct Answer A
Which of the following terms is used to denote insurance companies?
- Broker
- Exchange C. Corporation D. Insurer - Correct Answer D
A social device for spreading the chance of financial loss among a large number of people is the definition of
- hazard
- risk
- insurance
- peril - Correct Answer C
Which of the following risks is most likely to be insurable?
- George is concerned about the financial impact his premature death would have on his family.
- Talyn is concerned about the financial impact large betting losses at the horse track will have on
- John is concerned about the financial impact on his savings when his car eventually becomes worn
his retirement savings.
enough to need to be replaced.
- Jewel is concerned about the nancial effect losing her hat would have on her weekly spending
money. - Correct Answer A
Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash by
- reduction B. avoidance C. transference D. retention - Correct Answer B
Chianna becomes injured in a car accident caused when she took her eyes off the road to answer her cell phone. This is an example of
- a physical hazard
- a moral hazard
- a morale hazard
- a legal hazard - Correct Answer C
An arrangement in which an insurer transfers part of the insurance risk to another insurance company is known as
- avoidance
- fraud
- Lloyd's associations
- reinsurance - Correct Answer D
Which of the following is NOT an example of insurable interest?
- Jose wishes to take out a life insurance policy on his own life to provide for his family in the event
- Ana wishes to take out a life insurance policy on her mother to ensure that funeral costs will be
- Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a careless
- Carla wishes to take out a life insurance policy on her best salesperson to protect the business
of his death.
covered when the time comes.
driver and Juan thinks his neighbor is likely to die in a car accident.
from lost sales in the event of the salesperson's death. - Correct Answer C
Kim is injured in a house fire. When the bills come, the insurance company pays 80% of the cost, and Kim pays the rest. This is an example of
- coinsurance
- a deductible
- extraneous insurance D. policy limits - Correct Answer A
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
- a stock insurer
- a mutual insurer C. a nonpro t insurer D. a fraternal insurer - Correct Answer B
Which of the following people represents several insurance companies but owns the policy expirations?
- Independent agent
- Exclusive agent
- Direct writing agent
- General agent - Correct Answer A
Which of the following can bind an insurance company by oral or written agreement?
- Property and casualty producer
- Life producer
- Broker
- Solicitor - Correct Answer A
lloyds - Correct Answer are association, not an insurance company
captiv - Correct Answer wholly-own subsidiary through the parent company
re-insurers - Correct Answer insurance company who insure other insurance company (reciprocal=provide insurance to each other)
Agent - Correct Answer represents the company
broker - Correct Answer represents the client
commission - Correct Answer =service fee
