Aflac Insurance Licensing Test- Key Concepts Practice Study Guide
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Course
Aflac Insurance
Institution
Aflac Insurance
Aflac Insurance Licensing Test- Key
Concepts Practice Study Guide
Insurance is defined as... - Answer️️ -the transfer of PURE risk to the
insurance company in consideration for a premium
Pure risk is... - Answer️️ -the chance of loss without any possibility for
gain
Speculative risk i...
the more people in the group, the more accurate predictions are
Most insurers buy reinsurance to... - Answer✔️✔️-protect themselves in the
event of a catastrophic loss
Insurance laws are not... - Answer✔️✔️-required to be uniform from one
state to another
A stock insurer may... - Answer✔️✔️-pay dividends to its shareholders
(stockholders), but they may not be guaranteed.
A reciprocal insurance company is... - Answer✔️✔️-managed by an attorney-
in-fact
A reciprocal insurer is defined as... - Answer✔️✔️-an unincorporated
association of individuals who insure each other
The government offers insurance primarily based upon... - Answer✔️✔️-
social needs (such as flood insurance and workers compensation) but does
not offer insurance for the purpose of preventing fraud
A foreign company has... - Answer✔️✔️-their home office in another state
An alien company is... - Answer✔️✔️-an insurer incorporated outside of the
US, who sells in the US
A producer may be personally liable when... - Answer✔️✔️-violating the
producer's contract
Producers represent... - Answer✔️✔️-the insurance company, not the
insured
Independent producers own... - Answer✔️✔️-their own accounts and are not
insurance company employees
Producers have... - Answer✔️✔️-express, implied, and apparent authority
Express authority is... - Answer✔️✔️-the authority a producer has that is
written in his/her contract
A producer's binding authority (if any) is... - Answer✔️✔️-expressed
(written down) in the producer's contract with the insurer the producer
represents
Implied authority is... - Answer✔️✔️-the authority not expressly (written)
granted, but is actual authority the producer has to transact normal
business activities
The elements of a legal contract may be remembered by... - Answer✔️✔️-the
acronym C.O.A.L.
consideration, offer, acceptance, legal purpose and legal capacity
A requirement for a valid contract is... - Answer✔️✔️-offer and acceptance,
or mutual agreement
Advertising the availability of insurance is not... - Answer✔️✔️-considered
to be an offer
An offer is... - Answer✔️✔️-a specific and definite proposal to enter into a
contract
The consideration on a policy need not... - Answer✔️✔️-be equal
A policy may not... - Answer✔️✔️-be voided due to unequal consideration
Under the consideration clause... - Answer✔️✔️-something of value must be
exchanged
Policy ambiguities always favor the insured because... - Answer✔️✔️-
insurance contracts are contracts of adhesion
Insurance policies are considered to be... - Answer✔️✔️-unilateral contracts,
in that only one party makes an enforceable promise the insurer
The principle of indemnity states... - Answer✔️✔️-the purpose mom
insurance is to restore the insured to the same position as before the loss
occurred
The principle of utmost good faith states... - Answer✔️✔️-that all parties to
an insurance transaction are honest
A representation is defined as... - Answer✔️✔️-the truth to the best of one's
knowledge
A warranty is defined as... - Answer✔️✔️-a sworn statement of truth,
guaranteed to be true
A breach of warranty may... - Answer✔️✔️-void a contract
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