Exam Ch 1

Question 1

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be

Answer 1

Decreasing Term

Question 2

The Family Term Rider incorporates..?

Answer 2

Spouse + Childrens term

Question 3

Risk in insurance terminology refers to

Answer 3

The Uncertainty of Loss

Question 4

Which type of Risk is classified as insurable

Answer 4

Pure

Question 5

What does the word Expressed mean?

Answer 5

Written

Question 6

The receipt given to a life insurance applicant when the application is completed and the initial premium is received is called a(n)

Answer 6

Conditional Receipt

Question 7

The principle that states that larger the number of exposure units, the more predictable the number of future losses will be is known as

Answer 7

Law of Large Numbers

Question 8

A license granted by state insurance authority to a company is known as

Answer 8

Certificate Of Authority

Question 9

having diabetes will be categorized as which type of hazard

Answer 9

Physical

Question 10

An agent who conducts business in a different state and where they are originally licensed in is labeled as a

Answer 10

Foreign Agent

Question 11

An agent who works for only one company and only sells their product is a

Answer 11

Captive/Career/Exclusive Agent

Question 12

What is an Agent?

Answer 12

Anyone who sells or aids in the selling of insurance. Legally represents the company.

Question 13

An agent who is licensed in the same state they do business in

Answer 13

Domestic Agent

Question 14

An agent licensed in another country but conducts business in the U.S

Answer 14

Alien Agent

Question 15

Regarding the Law of Large numbers: The larger the number the more accurate the prediction. True or False?

Answer 15

True

Question 16

What is a Fiduciary?
a) a person who pays premiums
b) a person who grants financial trust
c) a person in position of financial trust

Answer 16

C) A person in position of financial trust

Question 17

activities such as scuba diving which increases the chance of a loss occurring is called a

1) Peril
2) pure risk
3) hazard
4) Speculative risk

Answer 17

3) Hazard

Question 18

What does the word Implied mean?

Answer 18

Assumed, Not stated

Question 19

An applicant who is visually impaired has what type of hazard

1) Physical
2) morale
3) moral
4) legal

Answer 19

1) Physical

Question 20

What is Insurance?

Answer 20

A contract whereby one party (Insurer/agent) agrees to INDEMNIFY another party

Question 21

Premium is another word for?..

Answer 21

Payment

Question 22

Is Pure risk Insurable?

Answer 22

Pure risk IS insurable yes (chance of only loss)

Question 23

Is speculative risk insurable?

Answer 23

Speculative risk is NOT Insurable

Question 24

What are events or conditions that INCREASE chance of loss?

Answer 24

Hazards

Question 25

What is the definition of Face amount?

Answer 25

Dollar amount to person, The amount payable in the event of death of the insured Other names are. Face Value, death benefits, policy proceeds, coverage, stated amount, indemnity amount or proceeds to benefits

Question 26

Moralle (eee) Hazards is?

Answer 26

Doing really (eee) unsafe things ex: speeding tickets

Question 27

Moral Hazards is?

Answer 27

A LIE

Question 28

Risk Management Techniques (STARR)

Answer 28

1) Sharing (dealing w risk for group or individual or business with same exposure of loss) *pension plans=retirment plan* 2) Transfer (most effective way to handle risk) 3) Avoidance (avoid plane 4 plane crash) 4) Retention (becoming self insured) 5) Reduction (lessen severity of loss)

Question 29

What is exposure

Answer 29

A UNIT OF MEASURE used to determine rates charged

Question 30

Tort

Answer 30

A private, civil non-contractual wrong for which a remedy through legal actions may be sought

Question 31

Unintentional Tort

Answer 31

any deliberate act that causes harm to another person (not considered a breach of contract)

Question 32

Peril

Answer 32

Cause of a loss FIRE