Mass State Life Insurance Exam Practice Questions and Answers (100% Pass
5 views 0 purchase
Course
Mass State Life Insurance
Institution
Mass State Life Insurance
Mass State Life Insurance Exam Practice
Questions and Answers (100% Pass)
Which of the following describes a participating life insurance policy? -
Answer️️ -A participating life policy is one in which the policyowner
receives dividends deriving from the company's divisible surplus
What ty...
Mass State Life Insurance Exam Practice
Questions and Answers (100% Pass)
Which of the following describes a participating life insurance policy? -
Answer✔️✔️-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? - Answer✔️✔️-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? - Answer✔️✔️-Upon
completion of the application
The State Guaranty Association guarantees - Answer✔️✔️-that a claim will
be paid if an admitted insurer becomes insolvent
Dividends from a mutual insurance company are paid to whom? -
Answer✔️✔️-Policyholders
What is considered the accounting measurement of an insurance
company's future obligations to its policyowners? - Answer✔️✔️-reserves
A group-owned insurance company that is formed to assume and spread
the liability risks of its members is known as a - Answer✔️✔️-risk retention
group
Which of the following is a syndicate established by a group of insurers to
share underwriting duties? - Answer✔️✔️-Lloyd's organization
An agent's authority to bind an insurer to an insurance contract may be
granted in the - Answer✔️✔️-agent's contract and the insurance company's
appointment
Dividends from a stock insurance company are normally sent to -
Answer✔️✔️-shareholders
Law of Large numbers - Answer✔️✔️--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 - Answer✔️✔️--involves opportunity for either loss or gain
-not covered by insurance companies
pure risk - Answer✔️✔️--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 - Answer✔️✔️-simply avoiding as
many risks as possible
treatment of risk through- reduction - Answer✔️✔️-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 - Answer✔️✔️-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 - Answer✔️✔️-also known as self-
insurance: when individuals have the financial ability to fund losses by
themselves when they occur
treatment of risk through- transfer - Answer✔️✔️-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 - Answer✔️✔️--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 must be definite and measurable - Time, place, amount, and when
payable
nature of insurance - Answer✔️✔️--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 - Answer✔️✔️-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? - Answer✔️✔️-
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 - Answer✔️✔️-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"? -
Answer✔️✔️-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?
4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SophiaBennett. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.49. You're not tied to anything after your purchase.
