PA Life, Accident, & Health Insurance Exam.pdf file:///C:/Users/HP/Desktop/NIW/PA%20Life,%20Accident,%20&%
PA Life, Accident, & Health Insurance Exam
1. Insurance
ANS defined as the transfer of PURE risk to the insurance company in consideration for a
premium.
2. The chance of loss without any chance of gain is called
ANS pure risk
3. Speculative risk
ANS has the possibility for gain or loss and is not insurable.
4. Risk is defined as the
ANS chance of loss.
5. A condition that could result in a loss is known as an
ANS exposure
6. A hazard is something that increases
ANS the chance of loss.
7. The presence of a physical hazard
ANS increases the chance of a loss occurring.
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,PA Life, Accident, & Health Insurance Exam.pdf file:///C:/Users/HP/Desktop/NIW/PA%20Life,%20Accident,%20&%
8. A peril is
ANS defined as a cause of loss, such as fire.
9. To be insurable,
ANS losses must be calculable.
10. The law of large numbers
ANS allows insurers to predict claims more accurately.
11. The law of large numbers applies to
ANS groups of people, not to individuals.
12. The more people in the group,
ANS the more accurate the predictions are.
13. Most insurers buy reinsurance
ANS to protect themselves in the event of a cata- strophic loss.
14. Insurance laws are not required
ANS to be uniform from one state to another.
15. A stock insurer
ANS may pay dividends to its shareholders (stockholders), but they may not be guaranteed.
16. A reciprocal insurance company is managed by an
ANS attorney-in-fact.
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17. An unincorporated association of individuals who insure each other is known as
ANS a reciprocal insurer.
18. The government offers insurance primarily based upon
ANS social needs, such as flood insurance and workers compensation, but does not offer
insurance for the purpose of preventing fraud.
19. A foreign company
ANS has their home office in another state.
20. An insurer incorporated outside of the U.S. who sells in the U.S. is
ANS an alien company.
21. A producer may be personally liable when
ANS violating the producer's contract.
22. Producers represent
ANS the insurance company, not the insured.
23. Independent producers
ANS own their own accounts and are not insurance com- pany employees.
24. Producers have
ANS express, implied and apparent authority.
25. The authority a producer
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