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Mass State Life Insurance Exam Questions and Answers (100% Pass)
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Mass State Life Insurance Exam Questions and Answers (100% Pass)
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©PREP4EXAMS@2024 [REAL-EXAM-DUMPS] Wednesday, July 31, 2024 9:10 AMMass State Life Insurance Exam
Questions and Answers (100% Pass)
Which of the following describes a participating life insurance policy? - ✔️✔️A
participating life policy is one in which the policyowner receives dividends deriving from
the company's divisible surplus
What type of reinsurance contract between two insurers involves an automatic sharing
of the risks assumed? - ✔️✔️Under treaty reinsurance, each party automatically accepts
specific percentages of the insurer's business.
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act? - ✔️✔️Upon completion of the application
The State Guaranty Association guarantees - ✔️✔️that a claim will be paid if an admitted
insurer becomes insolvent
Dividends from a mutual insurance company are paid to whom? - ✔️✔️Policyholders
What is considered the accounting measurement of an insurance company's future
obligations to its policyowners? - ✔️✔️reserves
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a - ✔️✔️risk retention group
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,©PREP4EXAMS@2024 [REAL-EXAM-DUMPS] Wednesday, July 31, 2024 9:10 AM
Which of the following is a syndicate established by a group of insurers to share
underwriting duties? - ✔️✔️Lloyd's organization
An agent's authority to bind an insurer to an insurance contract may be granted in the -
✔️✔️agent's contract and the insurance company's appointment
Dividends from a stock insurance company are normally sent to - ✔️✔️shareholders
Law of Large numbers - ✔️✔️-insurance is based on the sharing of risks among a large
group of people
-states that the larger the number of people, the more predictable the actual losses will
be
-companies use this data to calculate rates
Speculative risk - ✔️✔️-involves opportunity for either loss or gain
-not covered by insurance companies
pure risk - ✔️✔️-a situation that can only result in a loss, there is no opportunity for
financial gain
-only type of risk that is insurable
treatment of risk through: avoidance - ✔️✔️simply avoiding as many risks as possible
-effective but not always practical
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,©PREP4EXAMS@2024 [REAL-EXAM-DUMPS] Wednesday, July 31, 2024 9:10 AM
treatment of risk through- reduction - ✔️✔️since we cannot avoid risk entirely we often
attempt to lessen the possibility of a loss by taking acting to reduce the risk
-
treatment of risk through- sharing - ✔️✔️when a group of individuals or businesses with
similar exposures share the losses that occur within that group
-reciprocal insurance exchange is a formal risk sharing arrangement
treatment of risk through- retention - ✔️✔️also known as self-insurance: when individuals
have the financial ability to fund losses by themselves when they occur
treatment of risk through- transfer - ✔️✔️the most effective way to handle risk
- risk is transferred to another party - insurance is the most common method of
transferring risk from an individual or group to an insurance company
elements of insurable risk - ✔️✔️-must be due to chance
-cannot be catastrophic
-must be randomly selected
• Loss exposure to be insured must be large - Insurance company must be able to
predict
loss ( based on law of large numbers)
- Loss must be definite and measurable - Time, place, amount, and when payable
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, ©PREP4EXAMS@2024 [REAL-EXAM-DUMPS] Wednesday, July 31, 2024 9:10 AM
nature of insurance - ✔️✔️-to provide financial protection against losses that may be
incurred due to a chance happening or event such as death, illness, or accident
-protection is provided through an insurance policy which is a simple device for
accumulating funds to meet these uncertain losses
ABC Company is attempting to minimize the severity of potential losses within its
company. The company is engaged in risk - ✔️✔️Risk reduction can reduce the chance
that a particular loss will occur, or it can reduce the amount of a potential loss if it
occurs.
How can an insurance company minimize exposure to loss? - ✔️✔️Many insurers are
able to minimize exposure to loss by reinsuring risks.
For insurance purposes, similar objects which are exposed to the same group of perils
are referred to as - ✔️✔️Similar objects of insurance that are exposed to the same group
of perils are called homogeneous exposure units.
Which of the following can be defined as "the potential for loss"? - ✔️✔️risk
An insurer has a contractual agreement which transfers a portion of its risk exposure to
another insurer. What type of contractual arrangement is this? - ✔️✔️Reinsurance
contracts accept a portion of the risk underwritten by another insurer who has
contracted for the entire coverage amount.
Which of the following can be defined as a cause of a loss? - ✔️✔️peril
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