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37 Cards in this Set
- Front
- Back
- 3rd side (hint)
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The owner of a camera store is worried that her new employees may help themselves to items from inventory without paying for them. What kind of hazard is described? |
Moral |
PMM |
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Which of the following is correct? |
🧡Only pure risks are insurable |
❤️Only speculative risks are insurable 🧡Only pure risks are insurable 💛Only speculative are insurable 💚Both pure risks & speculative risks are insurable 💙Neither pure risks nor speculative risks are insurable |
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Buying insurance is one of the most effective ways of: |
Transferring risk |
ARRT |
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Tom buys his wife a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box. This is an example of: |
Reduction |
ARRT |
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Which of the following best describes the function of insurance? |
🧡It spreads financial risk over a large group to minimize loss to any one individual. |
❤It is a form of legalized gambling 🧡It spreads financial risk over a large group to minimize loss to any one individual. 💛It protects against living too long 💚It creates and protects risks. |
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An insurance company organized & headquartered in Florida can be described as what type of company in Florida? |
Domestic |
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Which of the following is statements regarding types of insurers is NOT correct? |
❤️Reinsurers usually deal with policy owners |
❤️Reinsurers usually deal with policy owners ❤️Mutual insurance companies are "owned" by their policy owners. ❤️Stock insurance companies seek a profit for their shareholders. ❤️Fraternal benefit societies must be nonprofit organizations. |
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In an insurance transaction, licensed agents legally represent which of the following? |
❤️Insurer |
❤Insurer ❤Applicant and insured ❤State office of insurance regulation ❤themselves |
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In Florida, properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent: |
❤the applicant and insured |
❤Insurer ❤Applicant and insured ❤State office of insurance regulation ❤themselves |
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A life insurance company organized in Illinois, with its home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as: |
❤A foreign company |
❤Domestic ❤Alien ❤Foreign ❤Regional |
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A insurer is a company that: |
❤️assumes a portion of the risk from another insurer |
❤accepts all the risk from another insurer ❤assumes a portion of the risk from another insurer ❤cedes the risk ❤does not take any risk |
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In addition to the state, the organization that regulates variable life and variable annuities is the: |
❤️Securities and Exchange Commissions (SEC) |
❤Federal Trade Commission (FTC)
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The State Guranty Association guarantees: |
❤that a claim will be paid if an insurer becomes insolvent |
❤that a policy will be issued ❤that a claim will be paid if an insurer becomes insolvent ❤that dividends will be paid ❤the rate of return on a policy |
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The authority that an insurer gives to its agent by means of the agent's contact is known as |
❤express |
❤implied authority ❤express authority ❤fiduciary responsibility ❤general authority |
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"An insurance contract is prepared by one party the insurer, rather than by negotiation between the contacting parties." Which of the following statements explain this characteristic of insurance contracts? |
❤Adhesion contract |
❤Aleatory contact ❤Acceptance contract ❤Adhesion contract ❤The insurance names only the insurer as the competent party |
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Which of the following statements regarding insurable interest is NOT correct? |
❤A policy obtained by a person without an insurable interest in the insured can be enforced. |
❤A policy obtained by a person without an insurable interest in the insured can be enforced. ❤Insurable interest exists when the applicant is the insured. ❤The applicant must be subject to loss upon the death, illness, or disability of the insured. ❤Generally, the person to be insured must give consent before a policy is issued, even if the applicant has an insurable interest. |
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Competent parties who can enter into insurance contacts are: |
❤All the above |
❤Applicants ❤Trusts and estates ❤business entities ❤All the above |
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Which of the following is an example of legal consideration? |
❤Initial premium |
❤Politeness ❤Initial premium ❤Legal purpose ❤Offer and acceptance |
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An insurance company has how many years to challenge the validity of a life insurance contact? |
❤Two |
❤One ❤Two ❤Three ❤Four |
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Which of the following terms is used for the voluntary relinquishment of a known right? |
❤Waiver |
❤Estoppel ❤Adhesion ❤Waiver ❤Unilateral |
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An insurance salesperson who offers a $100 gourmet dinner in exchange for a purchase of a life insurance policy would be considered to have violated ethical sales practice by: |
❤Rebating |
❤Twisting ❤Replacement ❤Churning ❤Rebating |
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All of the following are involved in a product presentation EXCEPT: |
❤Pressure |
❤Pressure ❤Education ❤Discussion ❤Disclosure |
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The basis for many state statutes regulating insurance advertising is the NAIC's: |
❤Unfair Trade Practice Act |
❤McCarran-Ferguson Act ❤Fair Credit Reporting Act ❤Ethics in Advertising Act ❤Unfair Trade Practice Act |
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Ethics is best described as: |
❤Instructions on how to interact with fellow members of a group or community |
❤Laws and statues enacted by duly elected representatives ❤religious rituals and ceremonies ❤Instructions on how to interact with fellow members of a group or community ❤a society's laws and regulations |
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Diverting insurance funds for personal use is an example of |
❤Misuse of premium |
❤replacement ❤rebating ❤Misuse of premium ❤Misrepresentation |
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Selling variable universal life insurance policies as mutual funds is an example of a prohibited practice called: |
❤misrepresentation |
❤Twisting ❤Misrepresentation ❤replacement ❤rebating |
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When an agent spreads a false story that damages a competing agent's reputation, the offense is called |
❤defamation |
❤twisting ❤defamation ❤disclosure ❤rebating |
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When values of an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions, this practice is called: |
❤churning |
❤replacement ❤misalliance ❤rebating ❤churning |
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Which of the following terms best describes a life insurance policy that provides a straight $100,000 of coverage for a period of five years? |
❤Level |
❤Permanent level ❤Whole term ❤Level term ❤Variable Term |
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"When level premium insurance is renewed, the premium amount rises to reflect the increased mortality risk of the insured's older age." Which phrase best describes this approach to increasing premiums? |
❤Step rate |
❤Variable rate ❤Targeted rate ❤Step rate
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Which of the following statements describing whole insurance is CORRECT? |
❤️Whole life insurance is designed to mature at age 100 |
❤The face amount of the policy gradually increases the longer the policy remains in force ❤The shorter the premium period, the slower the cash value will grow ❤Whole life insurance is designed to mature at age 100 ❤The policy's cash value decreases each year the policy is in force/ |
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The cash values of life insurance policies belong to which of the following? |
❤Policyowner |
❤Policy owner ❤Insured ❤Insurer ❤Beneficiary |
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Which of the following whole life insurance policies attempts to make insurance premiums more manageable by offering lower premiums during the first few years following issue? |
❤Modified whole life |
❤Minimum deposit whole life ❤Indexed whole life ❤Modified whole life ❤Indeterminate premium whole life |
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What type of policy would be best used when the need for protection declines from year to year? |
❤Decreasing term |
❤Level term ❤Decreasing term ❤Whole life ❤Universal life |
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A policy covering 2 lives that only pays a death benefit when the second insured person dies is: |
❤a joint and last survivor policy |
❤a joint life policy ❤a family policy ❤a double indemnity policy ❤a joint and last survivor policy |
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Which of the following allows 30 days during which premiums may be paid to keep policies in force? |
❤Grace period |
❤Grace period ❤Reinstatement clause ❤Incontestable clause ❤waiting period |
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An error in age is discovered after the death of an insured but before any policy death proceeds are distributed. How would an insurance company handle such a situation? |
❤The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age. |
❤No adjustments would be made because the contestable period had passed ❤The amount of death proceeds would be reduced to reflect the statistically diminished mortality risk ❤The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age. ❤The beneficiary would be required to pay all underpaid back premiums before the death benefit is received |
