PRIMERICA LIFE INSURANCE EXAM WITH ANSWERS
An insured purchased an insurance poli-
cy 5 years ago. Last year, she received a
dividend check from the insurance com-
pany that was not taxable. This year, she
did not receive a check from the insurer.
From what type of insurer did the insured
pu...
PRIMERICA LIFE INSURANCE EXAM WITH ANSWERS
An insured purchased an insurance poli-
cy 5 years ago. Last year, she received a
dividend check from the insurance com-
A. mutual
pany that was not taxable. This year, she
did not receive a check from the insurer.
funds not paid out after paying claims
From what type of insurer did the insured
and other operating costs are returned
purchase the policy?
to the policy owners in the form of a
a. mutual dividend. if all funds are paid out, no div-
b. reciprocal idends are paid
c. nonprofit service organization
d. stock
Following a career change, an insured
is no longer required to perform many
physical activities, so he has implement-
ed a program where he walks and jogs
for 45 minutes each morning. The in-
B. reduction
sured has also eliminated most fatty
foods from his diet. Which method of
the insured's change in lifestyle and
dealing with risk does this scenario de-
habits would likely reduce the chances of
scribe?
health problems
a. retention
b. reduction
c. transfer
d. avoidance
In insurance, an offer is usually made
when
A. an applicant submits an application to
the insurer
a. an applicant submits an application to
the insurer
in insurance, the offer is usually made
b. the insurer approves the application
by the applicant in the form of an appli-
and receives the initial premium
cation. acceptance takes place when an
c. the agent hands the policy to the poli-
insurer's underwriter approves the appli-
cyholder
cation and issues a policy
d. an agent explains a policy to a poten-
tial applicant
, PRIMERICA LIFE INSURANCE EXAM WITH ANSWERS
the causes of loss insured against in an
insurance policy are known as
A. perils
a. perils
perils are the causes of loss insured
b. losses
against in an insurance policy
c. risks
d. hazards
what documentation grants express au-
thority to an agent?
A. agents contract with the principal
a. agents contract with the principal
the principal grants authority to an agent
b. agents insurance license
through the agent's contract
c. fiduciary contract
d. state provisions
which of the following best describes
an insurance company that has been
A. domestic
formed under the laws of this state?
a company is domestic when doing busi-
a. domestic
ness within the state in which it is incor-
b. sovereign
porated
c. alien
d. foreign
D. race
which of the following factors is NOT con-
sidered by an underwriter when deter-
age, medical history, and sex provide
mining the premium rates for an individ-
sound statistical date for determining the
ual seeking insurance?
probability of loss. Race, religion, sexual
orientation, etc. are the factors that can-
a. medical history
not be used because there is not sound
b. sex
statistical data to show that they effect
c. age
the probability of loss; therefore, they are
d. race
considered to be discriminatory
in insurance transactions, fiduciary re-
sponsibility means A. handling insurer funds in a trust capac-
ity
a. handling insurer funds in a trust capac-
ity an agents fiduciary responsibility in-
b. maintaining good credit record
, PRIMERICA LIFE INSURANCE EXAM WITH ANSWERS
c. being liable with respect to payment of
claims cludes handling insurer funds in a trust
d. commingling premiums with agents capacity
personal funds
the authority granted to an agent through
the agent's contract is referred to as
B. express authority
a. absolute authority
express powers are written into the con-
b. express authority
tract between the insurer and the agent
c. apparent authority
d. implied authority
insurance policies are not drawn up
though negotiations, and an insured has
D. adhesion
little to say about its provisions. what con-
tract characteristic does this describe?
a contract of adhesion is prepared by
only the insurer; the insured's only option
a. unilateral
is to accept or reject the policy as its
b. conditional
written
c. personal
d. adhesion
which of the following insurers are owned
by stockholders who have the usual
rights of ownership, including the right of
C. stock
voting?
only stock insurance companies are
a. reciprocal
owned and controlled by stockholders
b. fraternal
c. stock
d. mutual
which of the following best describes the
concept that the insured pays a small
C. aleatory
amount of premium for a large amount of
risk on the part of the insurance compa-
an insurance contract is an aleatory con-
ny?
tract in that it requires a relatively small
a. subrogation amount of premium for a large risk
b. warranty
, PRIMERICA LIFE INSURANCE EXAM WITH ANSWERS
c. aleatory
d. adhesion
When an insured makes truthful state-
ments on the application for insurance D. consideration
and pays the required premium, it is
known as which of the following? consideration is something of value that
each party gives to the other. The consid-
a. legal purpose eration on the part of the insured is the
b. contract of adhesion payment of premium and the represen-
c. acceptance tations made in the application
d. consideration
D. the applicant has a prior felony convic-
which of the following would qualify as tion
a competent party in an insurance con-
tract? when an insurer and insured enter into
a contract, both parties must be legal
a. the applicant is intoxicated at the time of age and mentally competent. It is le-
of application gal for a person convicted of a felony to
b. the applicant is 12 year old student buy an insurance contract. An intoxicated
c. the applicant is under the influence of person, however, may not be mentally
a mind-impairing medication at the time competent, a 12 year old student is con-
of application sidered to be underage in most states
d. the applicant has a prior felony convic- and a person under mind-impairing med-
tion ication most likely would not be mentally
competent
an insurer neglects to pay a legitimate C. consideration
claim that is covered under the terms of
the policy. Which of the following insur- the binding force in any contract is con-
ance principles has the insurer violated? sideration. consideration on the part of
the insureds the payment of premiums
a. representation and the health representations made in
b. adhesion the application. Consideration on the part
c. consideration of the insurer is the promise to pay in the
d. good health even of loss
which of the following is a primary source
A. application
of information used for insurance under-
writing?
the application contains most of the infor-
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