Pennsylvania Life Insurance Test

Front 1

What type report provides information about the applicants hobbies habits and financial status?

Back 1

Inspection Report

Front 2

Insurance is used to transfer what to the insurance company?

Back 2

Financial responsibility for loss

Front 3

What two elements are necessary for a life insurance contract to have a legal purpose?

Back 3

Insurable interest and consent.

Front 4

When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

Back 4

Insurer

Front 5

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

Back 5

Loss

Front 6

What document is required for an insurance company to transact insurance?

Back 6

Certificate of Authority?

Front 7

What are the three types of agent authority?

Back 7

Express, implied and apparent.

Front 8

When would a misrepresentation on an insurance application be considered fraud?

Back 8

When it is intention and material.

Front 9

In the agent/insurer relationship, who is considered the principal?

Back 9

Insurer

Front 10

A state-issued document empowering an insurance company to become an admitted insurer is called what?

Back 10

Certificate of authority

Front 11

When does an insurance policy go into effect?

Back 11

When the policy is delivered and the premium is paid

Front 12

A situation in which a person can only experience a loss and no gain presents what type of risk?

Back 12

Pure risk

Front 13

An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer's classification in Nevada?

Back 13

Foreign

Front 14

Who owns stock companies?

Back 14

Stockholders

Front 15

What type of risk is insurable?

Back 15

Pure

Front 16

Whom does an insurance agent represent?

Back 16

Insurance company

Front 17

Insurance is a contract that protects the insured from what?

Back 17

Loss

Front 18

What law protects consumers from the circulation of inaccurate or obsolete information?

Back 18

The Fair Credit Reporting Act

Front 19

An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

Back 19

Mutual

Front 20

An insurance company that is formed under the laws of another state is known as what type of insurer?

Back 20

Foreign

Front 21

If an applicant does not receive his or her insurance policy, who would be held responsible?

Back 21

The agent

Front 22

According to the Law of Agency, a principal is represented by whom?

Back 22

Agent or producer

Front 23

What entities make up the Medical Information Bureau?

Back 23

Insurers

Front 24

If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?

Back 24

Provide the applicant a Disclosure Authorization Notice

Front 25

A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?

Back 25

Morale

Front 26

Whose responsibility is it to determine that all the questions on an insurance application are answered?

Back 26

The agents

Front 27

In order to transact insurance within a given state, an alien insurer must first obtain what?

Back 27

Certificate of Authority

Front 28

What are the most common penalties for violations of insurance statutes?

Back 28

A cease and desist order, a fine, and license suspension or revocation

Front 29

What type of insurer is formed under the laws of another country?

Back 29

Alien

Front 30

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Back 30

Underwriting

Front 31

For the purpose of insurance, what is risk?

Back 31

Uncertainty of loss

Front 32

Conditions that increase the chance of a loss are known as what?

Back 32

Hazards

Front 33

What is the term for the causes of loss insured against in an insurance policy?

Back 33

Peril

Front 34

What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Back 34

Law of large numbers

Front 35

What are the three types of hazards?

Back 35

Physical, moral and morale

Front 36

What type of insurer is a voluntarily formed organization that provides insurance benefits for members of an affiliated lodge or religious organization with a representative form of government?

Back 36

Fraternal insurer

Front 37

Insurers are classified according to their domicile. What are the three types of insurers?

Back 37

Domestic, foreign, and alien

Front 38

If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?

Back 38

Send the application back to the applicant for signature

Front 39

The insurer organized to return a profit to the stockholders is what type of insurer?

Back 39

Stock company

Front 40

When risks with higher probability of loss are seeking insurance more often than other risks, this is knows as what?

Back 40

Adverse selection

Front 41

The type of insurance company organized to return any surplus money to its policyholders is known as what?

Back 41

Mutual company

Front 42

What are the strategies used by underwriters to prevent adverse selection?

Back 42

Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate

Front 43

What are the four elements of an insurance contract?

Back 43

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

Front 44

What do individuals use to transfer their risk of loss to a larger group?

Back 44

Insurance

Front 45

Wagering on a sporting event is known as what type of risk?

Back 45

Speculative

Front 46

What is the best way to handle incomplete insurance applications?

Back 46

Return the application to the applicant for completion

Front 47

In insurance, when is the offer usually made on a contract?

Back 47

When the insurance application is submitted

Front 48

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

Back 48

Complete a new application or ask the applicant to initial the correction on the original application

Front 49

In forming an insurance contract, when does an acceptance usually occur?

Back 49

When an insurer approves a prepaid application

Front 50

What are the five characteristics of an ideally insurable risk?

Back 50

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.