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PA Life, Accident, & Health Insurance Exam 2024/2025 graded A+
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PA Life, Accident, & Health Insurance Exam 2024/2025 graded A+
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PA Life, Accident, & Health InsuranceExam
Insurance - ANSdefined as the transfer of PURE risk to the insurance company in
consideration for a premium.
The chance of loss without any chance of gain is called - ANSpure risk
Speculative risk - ANShas the possibility for gain or loss and is not insurable.
Risk is defined as the - ANSchance of loss.
A condition that could result in a loss is known as an - ANSexposure
A hazard is something that increases - ANSthe chance of loss.
The presence of a physical hazard - ANSincreases the chance of a loss occurring.
A peril is - ANSdefined as a cause of loss, such as fire.
To be insurable, - ANSlosses must be calculable.
The law of large numbers - ANSallows insurers to predict claims more accurately.
The law of large numbers applies to - ANSgroups of people, not to individuals.
The more people in the group, - ANSthe more accurate the predictions are.
Most insurers buy reinsurance - ANSto protect themselves in the event of a catastrophic
loss.
Insurance laws are not required - ANSto be uniform from one state to another.
A stock insurer - ANSmay pay dividends to its shareholders (stockholders), but they may not
be guaranteed.
A reciprocal insurance company is managed by an - ANSattorney-in-fact.
An unincorporated association of individuals who insure each other is known as - ANSa
reciprocal insurer.
The government offers insurance primarily based upon - ANSsocial needs, such as flood
insurance and workers compensation, but does not offer insurance for the purpose of
preventing fraud.
, A foreign company - ANShas their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - ANSan alien company.
A producer may be personally liable when - ANSviolating the producer's contract.
Producers represent - ANSthe insurance company, not the insured.
Independent producers - ANSown their own accounts and are not insurance company
employees.
Producers have - ANSexpress, implied and apparent authority.
The authority a producer - ANShas that is written in his or her contract is known as express
authority.
A producer's binding authority (if any) - ANSis expressed (written down) in the producer's
contract with the insurer the producer represents.
The authority not expressly (written) granted, - ANSbut is actual authority the producer has
to transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - ANSby the acronym C-O-A-L
(consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - ANSis offer and acceptance, or mutual agreement.
Advertising the availability of insurance is not - ANSconsidered to be an offer.
A specific and definite proposal to enter into a contract is known as - ANSan offer.
The consideration on a policy need - ANSnot be equal.
A policy may not be voided - ANSdue to unequal consideration.
Under the consideration clause, - ANSsomething of value must be exchanged.
Because insurance contracts are contracts of adhesion, - ANSpolicy ambiguities always
favor the insured.
Insurance policies are considered - ANSto be unilateral contracts, in that only one party
makes an enforceable promise the insurer.
The principle of indemnity states - ANSthe purpose of insurance is to restore the insured to
the same position as before the loss occurred.
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