Life & Health 1

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Life & Health 1 1. The N.A.I.C. developed: The Advertising Code The Unfair Trade Practices Act Both Neither 2. Rebating would be permitted in all the following cases except: The rebate must be available to all insureds in the same actuarial class The percentage of rebate cannot discriminate Rebates should be given to insureds who purchases a policy from an insurer that prohibits rebating Rebating is illegal in Florida 3. Lloyd's of London: insures unusual perils does not insure anything 4. Statements made by an applicant for a life insurance policy which are supposed to be true are referred to as: representations facts warranties information 5. Sonny submitted an application, with the first month's required premium, to the insurance company for $100,000. The company issued the policy as applied for. Which statement is true? The company made the offer and Sonny accepted. Sonny made the offer and the company accepted. The agent soliciting the application made the offer on behalf of the company. It depends. 6. Which type of authority does a contract give the agent? Contractual Implied Apparent Expressed 7. Rooster died as the result of an automobile accident. His alcohol level was well above the state's limit for impairment. The accident was considered: a physcial hazard. a moral hazard. a peril. all the above 8. All of the following statements describe risk avoidance, EXCEPT: Wendy keeps her money out of the stock market. Pat pays his insurance premium. John never drives a car. 9. A _______ contract may be set aside. void voidable misrepresented bad 10. The statement " there is no attempt to value financial loss" would be applied to which of the following? A valued contract An indemnity contract The doctrine of subrogation All of the above 11. Which Act gives the Chief Financial Officer the right to suspend licenses, assign fines, and prosecute insurance companies? The McCarran-Ferguson Act Advertising Code The Florida Legislature The Unfair Trade Practices Act 12. A/an __________ is the voluntary giving up of a legal right. Estoppel Waiver Aleatory Warranty 13. In order to comply with the Fair Credit Reporting Act, at which of the following times must an agent notify an applicant that a credit report may be requested? at the initial interview at the time of the application when the applicant's credit is actually checked when the policy is delivered 14. Which of the following is not considered an insurance company? Lloyd's of London Risk Retention Groups Reciprocal Insurers Assessment Insurers 15. Participating policy dividends are influenced by three factors which include all the following EXCEPT: Mortality cost savings Reserve Interest earnings Operating expenses (loading) Regulations of the N.A.I.C. 16. Which of the following statements concerning pure & speculative risks is/are true? 1. Pure risks have only the chance for loss. 2. Speculative risks have only the chance for gain. 3. Only pure risks are insurable. 4. Both pure and speculative risks are insurable. 1, 3, 4 1 & 3 1, 2, & 3 2, 3, & 4 17. Which of the following is a distinguishing element of an insurance contract? consideration competent parties incontestability offer and acceptance 18. An agent represents the: buyer company buyer and the company agent 19. Which of the following statements are true? Stock companies sell only non-particpating policies Mutual companies sell only non-participating policies Stock companies sell both participating and non-participating policies Mutual companies sell both participating and non-participating policies 20. The policyowner/insured of a $100,000 life insurance policy died of a heart attack four months after taking out the policy. The company then learned that the insured had been treated for a heart condition nine months prior to being insured, but the fact had been omitted from the application. Which course of action would the company likely follow? 1. The company had to pay the death benefit because the discrepancy was not uncovered prior to the insured's death. 2. The company had to pay the death benefit because the contract is incontestable after the payment of the initial premium. 3. The company will not have to pay the death benefit, but will return the premiums. 1 only 2 only 3 only 1 & 2 21. Another name for a home service company is: industrial debit door to door neihborhood 22. Which is true about the net payment cost comparison index and the surrender cost comparison index? They are found at the end of the policy They are found in the policy summary They are found in the entire contract They must be presented at policy delivery 23. The opposite of an Aleatory contract is a: Unilateral Commutative Adhesion Bilateral 24. The Financial Modernization Act: Repealed the Glass-Steegal Act Prohibits banks from selling more than $50,000 of total life insurance on any one life Prohibits banks from selling life insurance Prohibits insurance companies from engaging in banking 25. Which of the following statements concerning void/voidable contracts is true? A voidable contract is unenforceable by law. A contract with a minor is a voidable contract. A void contract may be set aside by the party having the right to do so. A void contract is without legal effect. 26. All of the following are unique elements of an insurance contract except? Insurable Interest Valued, Indemnity Adhesion Consideration 27. The Fraternal Order of Orion the Hunter, a fraternal benefit society, may sell insurance to: Anyone. Most fraternal societies today offer insurance to non-members as well. only members of the organization. 28. While New Mexico Life Insurance Company is operating in the state of Florida, it would be considered by the state of Florida to be a/an: A Foreign Company. A Domestic Company. An Alien Company. A nonadmitted company. 29. Which term describes a contract which is prepared by only one party? Aleatory Adhesion Personal Unilateral 30. Tom completes the application, pays the initial premium, and the agent submits this to the insurance company. The insurer issues a policy with several riders and waivers not requested by Tom. Which of the following answers describes the insurer's action? An acceptance by the company A counter offer by the insurer A voidable contract An offer and acceptance 31. Which of the following gives the state their ability to fine, issue cease and desist orders and impose penalties? unfair trade practices act unfair claim settlement practices act the Code of Ethics of the FAIFA the McCarran-Ferguson Act 32. All of the following are not considered competent parties to the contract except: Minors The mentally infirm Physically disabled Those under the influence of alcohol or narcotics 33. Andy the agent was fired by the general agent three months ago for conduct "unbecoming". Andy's general agent later was known to accept business that Andy had written after having been fired. One of these policy holders died before the policy was issued but had paid the required premium. Assuming the applicant had been insurable at standard rates, the company would pay because of: apparent authority implied authority expressed authority agency law 34. Which of the following statements would mean that the values of the contract are unequal? unilateral adhesion aleatory bilateral 35. Which of the following is not a characteristic of a fraternal organization? A lodge system A non-profit organization Members receive a policy Members receive a certificate 36. An insurable interest must exist when: A life insurance policy is issued Death proceeds become payable Policy ownership is transferred Cash values are borrowed 37. Which of the following statements are true? Both Personal Producing agents and Career agents sell and train. Both General agents and P.P.G.A.'s sell and train. Too many questions, I can't take it any more. Career agents are contracted to represent the particular company. 38. The opposite of a unilateral contract is a : collateral contract multi-lateral contract bilateral contract omni-lateral contract 39. A company that is licensed to sell insurance in a state in which it is domiciled is called: a domestic company an alien company a nonadmitted company an authorized company 40. Regarding warranties and representations, which of the statements below are true? If a warranty is untrue, the insurer has the right to cancel the contract If a representation is untrue, the insurer has the right to cancel the contract only if the representation was not material If a representation is untrue, the insurer has the right to cancel the contract If a warranty is untrue, the insurer has the right to cancel the contract only if the representation was material 41. Which of the following is/are true concerning the N.A.I.C.? They are instrumental in developing guidelines and model legislation They develop standards for policy provisions They created the Unfair Trade practices act and the Advertising Code All of the above 42. An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation EXCEPT: The applicant has the right to obtain a copy of the consumer report directly from the insurance company that used the report. The applicant has the right to obtain disclosure of the substance of the information in the consumer report from the reporting agency. The applicant has the right to obtain the names of all people contacted within the past 6 months. Applicants must be notified within 3 days that a report has been requested. 43. Agents hired by a P.P.G.A. are considered to be employees of the : P.P.G.A. Company Both Neither 44. Which of the following could be considered a commercial company? a stock or mutual company a service provider an assessment company a health maintenance organization 45. If 100 men, age 25, desired to provide their beneficiary with $10,000, how much would each have to pay if we knew three were going to die? $30 $300 $3000 $309 46. The New York Insurance Code was established due to which of the following events? Paul vs Virginia-1868 The Armstrong Investigation-1905 The McCarran Ferguson Act-1945 The New York Insurance Act -1898 47. Ima Yankee has been licensed for seven years. How many hours of continuing education does Ima need? 20 hours every two years 24 hours every two years none, he knows it all 48. Which of the following is not a federal government insurance program? National Service Life Service members group life Veterans group life medicaid 49. The "right of subrogation" means the insurance company may acquire the right of the insured against liable third parties, those that may have contributed to the loss, in the event a claim is paid. This could be found in which type of contract? a life insurance contract a valued contract disability contracts indemnity contracts 50. An agent's license will terminate if he or she allows how many years to pass with-out an appointment? Two years Four years Five years Six years 51. All of the following systems support the sale of insurance through agents EXCEPT: career agency system PPGA's independent agency system direct selling 52. Which of the following is not a valued contract? a variable universal policy A disability policy an accidental death and dismemberment policy an 80/20 major medical policy 53. An applicant for insurance denied having ever been diagnosed with heart problems when in fact he had recently had triple by-pass surgery. How long does the company have to uncover this fact? one year two years five years Fraud is forever contestable. 54. In a sales transaction, the agent will represent the: the company the policyowner/insured both 55. The insurance industry is second only to which of the following as a source of investment funds? Housing Commercial Banking Brokerage Houses Wire Houses 56. The Florida Guarantee Association: Protects the insured if the insurer becomes insolvent Protects the insurer if the insurer becomes insolvent Protects the agent if the insurer becomes insolvent Protects the insurer if the insured becomes insolvent 57. It is possible to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time. This is based on which of the following principles? Law of Large Numbers Insurance Probabilities Homogeneous Probabilities Law of Large Returns 58. Bill Wilson wants to obtain a life insurance policy on his employee, Kenneth Myers, and names Kenneth's wife, Susan, as the beneficiary. Signatures of which of the following would be legally required on the application? 1. Bill 2. Kenneth Myers 3. Susan 1 only 1 and 2 only 2 and 3 only 1, 2 and 3 59. An agent owes a fiduciary responsibility to: the company the client the company and the client the client and the beneficiary 60. Which of the following is not true concerning the National Association of Insurance Commissioners? It created the advertising code and the Unfair Trade Practices Act. It encourages uniformity in state insurance laws by legislative acts. It is concerned with the preservation of state regulation. It develops standards for policy provisions. 61. An agent's license is perpetual unless suspended or revoked. True False 62. Which statement most accurately describes a unilateral contract? Both parties to the contract are bound to the terms. Both parties adhere to the contract. Both parties exchange goods of equal value. Only one party is legally bound to the contract. 63. If an insured did not pay his premium the company may or may not exercise their right to cancel the policy. This would apply to which of the following contracts? A void contract A voidable contract An implied contract A verbal Contract 64. All of the following statements about life insurance and the risk it covers are true EXCEPT: Life insurance is a mechanism for pooling and sharing risks. As the number of separate risks of the same type increases, the amount of loss within a given group becomes more certain. The probability of an individual insured's death increases each year until it becomes a certainty. Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured. 65. When an applicant applies for insurance by completing an application and paying one month's premium, this constitutes: Consideration and an offer to buy. An acceptance. A conditioned contract. A completed contract. 66. Long Life, a stock insurance company, transfers ownership of the company to the policy holders. This process is called: an illegal act de-mutalization mutualization a mutual-stock combinational company 67. Selling insurance through a vending machine would be: mass marketing direct selling a yank and pull a prohibited practice 68. A person covered under a service insurer is called: the insured the member the client the subscriber 69. A stock insurance company has stockholders and policyholders. The directors & officers are responsible to which of the following? The policyholders The stockholders Stockholders & policyholders Board of directors 70. Tendencies for attitude and state of mind which cause indifference to loss are a: moral hazard morale hazard physical hazard dukes of hazard 71. Which of the following statements about representations and warranties is/are true? 1. If a warranty is untrue the company may cancel the contract 2. If a representaion is untrue the company can not cancel the contract unless it is a material fact. 1 only 2 only Both 1 and 2 Neither 1 nor 2 72. For the benefit of a lower premium, Tommy stated on his insurance application that he was five years younger than his actual age. The policy was issued as applied for and 15 months later Tommy died in an automobile accident. Which course of action would the insurance company take? The claim would be denied. The full benefit would be paid. The higher premium would be subtracted from the benefit. A reduced benefit would be paid. 73. For a risk to be insurable it must contain all of the following characteristics EXCEPT: The loss must be definite and measurable. The loss exposures to be insured must be large. The loss must not be due to chance. The loss must be predictable. 74. The use of testimonials, special offers, or statistics would be found under what code or act? Unfair Trade Practices Act Fair Trade Practices Act Unfair Advertising Code Advertising Code 75. Rules pertaining to testimonials, statistics and special offers would be found in: the policy summary the entire contract the advertising code buyers guide 76. The following statements about INSURABLE INTEREST are true EXCEPT: Brothers and sisters have an insurable interest in each other. A creditor can have an insurable interest in a debtor limited to the amount of indebtedness. An insurable interest must exist between the policy owner and the insured at the time of the claim. People are considered to have an insurable interest in themselves. 77. A group of pharmacists or dentists might be covered under: a reinsurance group a risk retention group a reciprocal group a fraternal group 78. Which of the following statements is/are true? Twisting is internal replacement Churning is external replacement Twisting is replacement with misrepresentation Twisting and churning are dance numbers 79. An applicant for a health policy has a heart condition of which he is unaware and therefore he answers "no" to the question pertaining to heart problems. His answer is considered to be a: Warranty Concealment Fraudulant answer Representation 80. An unlicensed salaried officer of an insurance company may sell life insurance in the state of Florida. True False 81. The authority of an agent to undertake certain functions for an insurance company would be found under which of the following? A contract of agency Agency law A contract of principal The general agency principal 82. To be characterised as a fraternal benefit society, the organization must : 1. be non-profit. 2. have ritualistic work within a lodge system. 3. elected officers. 4. operate on a pure assessment system. 1, 2, & 3 2, 3, & 4 1, 3, & 4 all the above 83. All statements on an application are considered to be: warranties representations material facts all the above 84. Assessment insurers: are stock companies operates on a loss sharing by group members are becoming popular in Florida have unlimited assessments 85. Agency law refers to the relationship between which two parties? the career agent and the general agent the career agent and the personal producing general agent the captive agent and the general agent the agent and the company 86. The company transferring the risk to another company is called the: The reinsurer The purchasing company The risk retention group The ceding company 87. Which statement concerning a life insurance contract is true? It is a personal contract and can be given away. It is not a personal contract and can be given away. It is a personal contract and can not be given away. It is not a personal contract and can not be given away.

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