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OHIO Life Insurance Exam Questions and Correct Answers.
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OHIO Life Insurance Exam Questions and Correct Answers.OHIO Life Insurance Exam Questions and Correct Answers.
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OHIO Life Insurance Exam Questions and CorrectAnswers.
Insurance: - Correct Answer a contract in which the insurance company agrees to
indemnify the insured party against loss, damage or liability arising from an unknown
event.
Insurance Transfers: - Correct Answer The risk of loss from an individual or business
entity to an insurance company, which in turn spreads costs of unexpected losses to
many individuals.
Direct response marketing: - Correct Answer A direct response marketing system
effectively bypasses the insurance agent. Business is conducted over the phone,
through the mail, or online. This is a perfectly legal approach to selling insurance. It is
not mandatory in all situations for the insured to physically sign any documents in order
for coverage to go into effect.
Insurance Transaction: (4) - Correct Answer Solicitation, Negotiations, Sale
(effectuation of a contract of insurance, and advising an individual concerning coverage
of claims.
Risk: (Two Types) - Correct Answer The uncertainty or chance of a loss occurring.
Pure Risk:
-Situations that can only result in a loss or no change. There is no opportunity for
financial gain. This is the only type that insurance companies will accept.
Speculative Risk:
-Involves the opportunity for either loss or gain. Ex: Risk of gambling. These are not
insurable risks.
Concealment: - Correct Answer the withholding of information that will result in an
imprecise underwriting decision.
Exposure: - Correct Answer a unit of measure used to determine rates charged for
insurance coverage.
EX of Life insurance factors:
-Age, medical history, occupation, and sex.
Homogenous: - Correct Answer A large number of units having the same or similar
exposure to loss.
Hazards: (3 types) - Correct Answer Conditions or situations that increase the
probability of an insured loss occurring.
,Physical hazards:
-Individual characteristics that increase the chances of the cause of loss. Ex: past
medical history, condition at birth (blindness).
Moral Hazards:
-Tendencies towards increased risk. Involves evaluating the character and reputation of
a proposed insured. Ex: When an applicant lies on the application for insurance.
Morale Hazards:
-Arise from a state of mind that causes indifference to loss, such as carelessness. Ex:
Not spending money on a flu shot because if you get the flu your insurance company
will pay for it.
Perils: - Correct Answer the causes of loss insured against in an insurance policy.
-Life insurance
-Health insurance
-Property insurance
-Casualty insurance
Loss: - Correct Answer the reduction, decrease, or disappearance of the value of the
person or property insured in a policy, caused by a named peril.
Look at transfer stuff pg. 7
Avoidance: (Method of handling risk) - Correct Answer Eliminating exposure to a loss.
Ex: If a person wanted to avoid the risk of being killed in an airplane crash, he/she might
choose never to fly in an airplane. It is effective but not practical.
Risk Retention: (Method of handling risk) - Correct Answer the planned assumption of
risk by an insured through the use of deductibles, copayments, or self-insurance.
Purpose of retention: (3 things) - Correct Answer 1) Reduce expenses and improve
cash flow
2) Increase control of claim reserving and claims settlements
3) To fund for losses that cannot be insured
Sharing: (Method of handling risk) - Correct Answer Method of dealing with risk for a
group of individuals or businesses with the same or similar exposure to loss to share the
losses that occur within that group.
Reduction: (Method of handling risk) - Correct Answer Includes actions such as
installing smoke detectors in our homes, having an annual physical to detect health
problems early, or perhaps making a change in our lifestyles.
, Transfer: - Correct Answer the most effective way to handle risk. Transfer it to another
party.
Reinsurance: - Correct Answer Is a contract which one insurance company indemnifies
another insurance company for part or all of its liabilities.
Nonparticipating policies: - Correct Answer Does not pay dividends to policy owners, but
taxable dividends are paid to stock holders. Usually issued by stock companies
Participating policies: - Correct Answer Pay dividends to policy owners based upon
actual mortality cost, interest earned and costs.
Risk Retention Group: - Correct Answer a liability insurance company owned by its
members.
Lloyd's Association: - Correct Answer Provides support facilities for underwriters or
groups of individuals that accept insurance risk.
Surplus lines: - Correct Answer Insurance for which there is no readily available
admitted market. They do not have a certificate of authority to transact business in the
state, but are on the Commissioner's approved list to transact business under the
state's surplus lines laws.
Offer: - Correct Answer this is made when submitting the application
Acceptance: - Correct Answer Takes place when an insurer's underwriter approves the
application and issues a policy.
Consideration: - Correct Answer the binding force in any contract.
Competent Parties: - Correct Answer the parties to a contract must be capable of
entering into a contract in the eyes of the law.
Legal Purpose: - Correct Answer The purpose of the contract must be legal and not
against public policy.
Contract of adhesion: - Correct Answer Is prepared by one of the parties and accepted
or rejected by the other party. Known as a take it or leave it contract
Lavatory Contract: - Correct Answer There is an exchange of unequal amounts or
values.
Personal Contract: - Correct Answer a contract is personal because it is between the
insurance company and an individual.
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