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NC Accident, Health & Sickness Quizzes Questions and Answers Rated A+
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NC Accident, Health & Sickness Quizzes
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NC Accident, Health & Sickness QuizzesA type of not-for-profit insurance provider that is operated by an organization that has a
representative form of leadership, operates on a lodge system, and exists solely for the
benefit of its members and their beneficiaries is called a - answer mutual insurance
company
*fraternal insurance company*
home service insurance company
reciprocal insurance company
Sponsored by fraternal societies, fraternal insurers are not-for-profit organizations that
specialize primarily in life insurance and annuity products that are usually available only
to the society's members.
Which one of the following insurance sales arrangements is not affiliated with a single
insurance company but instead represents multiple companies? - answerA sales
arrangement in which sales are made directly to consumers through mass media
channels without the use of producers.
A sales office that is managed by general manager who is an employee of the ABC
Insurance Co.
A sales office that is managed by an independent contractor, called a general agent,
who employs sales representatives traditionally called agents.
*A sales office that is managed by a Personal Producing General Agent (PPGA).*
PPGAs manage independent agencies that are not affiliated with a single insurer but
instead have sales agreements with multiple insurers.
Why would a large manufacturer choose to self-insure rather than buy an insurance
policy from an insurance company? - answer*To save insurance premiums by paying
relatively minor losses.*
To cover severe losses.
For tax abatement purposes.
To avoid having to comply with individual state laws.
A company that is financially able to pay for relatively minor losses can save on the cost
of insurance premiums. It covers these minor claims and the administrative costs of
running an internal insurance program.
The insurance company function that is responsible for calculating company mortality
and morbidity rates, and calculating dividends on participating life insurance policies, is
the - answerclaims division
sales division
,*actuarial division*
underwriting division
Besides determining company premium rates and calculating participating policy
dividends, the actuarial division is responsible for determining appropriate cash
reserves on claims.
The purpose of the buyer's guide, which must be given to every insurance prospect, is
to - answer*Explain the general features, benefits, and conditions of the type of
insurance being considered.*
Advise the buyer to consider an alternative to the insurance product being considered.
Provide buyers with details of the insurance policy they are considering for purchase.
Explain the step-by-step process involved in purchasing the recommended product.
The contract between the producer and insurer, setting forth certain acts and duties the
producer is specifically authorized to perform, is an example of - answeragency
authority
implied authority
*express authority*
apparent authority
Express authority is described, in writing, in contracts and related agreements.
Agents must act in the best interests of applicants and insureds. What does this require
them to do? - answeravoid replacing insurance policies that applicants already own
*give all important information about a proposed policy*
help applicants get rebates for buying policies
tell applicants about the features and benefits of other insurers' policies so that they can
make an informed decision about which policy to buy
Agents must act in the applicant's or insured's best interests at all times. This means
that agents must give all important information about a proposed policy. Also, they
cannot misrepresent the terms or conditions of a proposed policy.
With respect to the field of insurance, who are the two parties bound by common law
rules of agency? - answerthe insurer and the insured
the state insurance department and the insurer
the producer and the policyowner
*the insurer and the producer*
Insurers and their producers are bound by common law rules of agency.
Which of the following best describes an agent's responsibilities? - answer*An agent
has to act in the best interests of insureds, applicants, and insurers.*
An agent has no fiduciary duty toward insurers, applicants, or insureds.
An agent only has to act in the best interests of the insurer he or she represents.
,An agent only has to act in the best interests of the insured or applicant, but not the
insurer.
In addition to the duties an agent owes to the insurer, the agent also must act only in the
best interests of the applicant or insured.
In addition to the fiduciary responsibility they have with all customer premiums and
assets, producers are expected to do all the following EXCEPT - answerMake sure all
product recommendations are suitable for the customer.
Disclose all pertinent information concerning a proposed policy.
Avoid all forms of rebating.
*Seek opportunities to replace existing policies with newer products.*
While policy replacement is not prohibited, it is discouraged and most states have rules
in place to identify unsuitable replacement.
Which of the following is NOT one of an agent's responsibilities to an applicant? -
answerdisclosing all important information about a proposed policy
*helping write an applicant's insurance policy*
recommending insurance products that are suitable for the customer's needs
avoiding replacing an insurance policy unless doing so will clearly benefit the applicant
Agents must act in the applicant's or insured's best interests at all times. This means
that agents must disclose all important information about a proposed policy. They
cannot misrepresent the terms or conditions of a policy, and must avoid replacing
policies unless it is in the applicant's best interests. Agents do not help write the actual
insurance policy.
The main purpose for errors and omissions insurance (E&O) is to - answer*Cover
damages that arise due to services a producer non-willfully failed to render.*
Pay for an insurance company executive to meet with a policy owner to correct an error
made by the producer during the sales process.
Allow the producer to be less diligent in complying with insurance sales disclosure
requirements.
Provide legal protection to the producer who is charged with willfully engaging in an
unfair trade practice.
E&O insurance covers injuries and damages that occur due to professional services a
producer rendered or failed to render without the willful intent to injure the customer.
Which of the following statements about representations and warranties is correct? -
answerA statement made on the application which is true to the applicant's best
knowledge is deemed a misrepresentation if it is later discovered to be inaccurate.
Promises made by the insurer in the insurance contract are deemed representations.
*Insurers can rescind (cancel) an insurance contract if a misrepresentation is
discovered on the application during the contestability period.*
, Statements made by the applicant on the application are deemed warranties.
Jana applied for a life insurance policy and submitted the initial premium with her
application. When Acme Insurers reviewed Jana's application, it decided to offer her a
modified policy at a higher premium. In this case, Acme Insurers has done what? -
answeraccepted a counteroffer from Jana
*made a counteroffer to Jana*
accepted an offer from Jana
made an offer to Jana
Why are ambiguities in an insurance contract most often interpreted in favor of the
insured or the policyowner? - answerThe policyowner is required to make enforceable
promises to the insurer.
Insurance contracts are unilateral.
*The contract's terms are drafted by the insurer without input by the policyowner.*
The policyowner is required to make ongoing premium payments.
Ambiguities in an insurance contract are usually interpreted in favor of the policy owner
because he or she had no say in drafting the terms of the contract.
Most insurance policies are personal contracts between the insurer and the policy
owner, which cannot be transferred to a new owner. Which of the following is NOT a
personal contract? - answermedical expense insurance policy
automobile policy
*life insurance policy*
disability income insurance policy
Emil, an agent licensed in North Carolina, moves to a new home on April 30. He is
required to notify the North Carolina Department of Insurance by what date? -
answerOctober 31
*May 10*
May 30
May 7
An agent who changes his or her residential or e-mail address must notify the Insurance
Department within ten days of the change.
When may the commissioner of Insurance examine the books and records of an
insurer? - answerat least once every two years
at least once every seven years
whenever requested by a majority of the shareholders
*whenever he or she deems it necessary*
The Commissioner may examine the books and records of an I insurer and may
question its officers and agents whenever he or she deems it necessary.
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