ALABAMA LIFE & HEALTH INSURANCE EXAM 2024 WITH 100% CORRECT ANSWERS
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ALABAMA LIFE & HEALTH INSURANCE
Institution
ALABAMA LIFE & HEALTH INSURANCE
ALABAMA LIFE & HEALTH INSURANCE EXAM 2024 WITH 100% CORRECT ANSWERS
Which of the following would be considered a speculative risk? - correct answer The possibility the painting you bought might be a long-lost masterpiece
A speculative risk is one in which there is a chance for either loss o...
ALABAMA LIFE & HEALTH INSURANCE EXAM 2024 WITH 100% CORRECT ANSWERS
Which of the following would be considered a speculative risk? - correct answer ✔✔ The possibility the painting you bought might be a long-lost masterpiece
A speculative risk is one in which there is a chance for either loss or gain. Example: Gambling, Casino's, Lottery, etc. All of the other choices describe pure risk, where there is no chance of gain, only a chance of loss exists.
Which is the proper term for a company owned by its policy owners? - correct answer ✔✔ A mutual insurance company
A producer who is acting as an agent is representing: - correct answer ✔✔ Always the insurer
All of the following are elements of a contract, except: - correct answer ✔✔ Authority
All enforceable contracts must include these characteristics: offer and acceptance (agreement), considerations, competent parties, and legal purpose. Authority is not considered one of the elements of a legal contract.
Each of the following would be an element in the definition of fraud, except: - correct answer ✔✔ An individual warrants a fact stated on the application
A warranted fact is one guaranteed to be true. Although no statement on an application is regarded as warranty, no fraud is involved if a statement is guaranteed to be true.
Examples of Fraud - correct answer ✔✔ Intentional material misrepresentation with the intent of causing injury to another party Withholding of known material facts
A false statement on the application that is material to the acceptance of the risk
A company that is licensed to sell insurance in a particular state is: - correct answer ✔✔ An authorized Company
In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as: - correct answer ✔✔ Competent parties
An insurance contract is an aleatory contract. This means: - correct answer ✔✔ Equal value is not given by both parties to the contract
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of last resort for individuals or businesses that
have been rejected by voluntary market insurers. - correct answer ✔✔ Residual
To address adverse selection what can an insurer legally do? - correct answer ✔✔ Establish and enforce sound underwriting practices
Underwriting helps to protect the insurer against adverse selection and accepting risks that are more likely than average to suffer losses.
A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): - correct answer ✔✔ Contract of Adhesion
_________ refers to the jurisdiction where an insurer was formed or incorporated. - correct answer ✔✔ Domicile: Domicile refers to the jurisdiction either state or country where an insurer was formed or incorporated. _____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers. - correct answer ✔✔ Surplus Lines
Insurance can be obtained through surplus lines brokers (producers) from non-admitted insurers.
To make insurance more affordable and protect the insurance company from paying out too much in claims, insurers will: - correct answer ✔✔ Reinsure the risk Reinsurance is what makes insurance affordable. Reinsurance companies are insurance companies that accept all or a portion of the financial risk of loss from the insurance company.
The field underwriter is the _________ and is not a determiner of insurability. - correct answer ✔✔ Producer
The producer is in the field soliciting applications for insurance and in effect is another pair of eyes and ears for the insurer in helping to issue policies to insurable prospects.
Third-party ownership refers to: - correct answer ✔✔ A situation where the policyowner is someone other than the insured
Which statement best describes the term reserve? - correct answer ✔✔ That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims
The applicant, if other than the proposed insured, must have: - correct answer ✔✔ An insurable interest in the life of the insured
Controlled business may be defined as insurance sold: - correct answer ✔✔ To the producer, the producer's family and friends, and the producer's business associates
With regard to life insurance policies, loading refers to: - correct answer ✔✔ Assignment of the appropriate share of the company's operating expenses to each policy
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