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PA Life Accident and Health Insurance Exam 183 Question with Verified Answers,100% CORRECT
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PA Life Accident and Health Insurance Exam 183 Question with Verified Answers
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PA Life Accident and Health Insurance Exam 183 Questionwith Verified Answers
Insurance - CORRECT ANSWER defined as the transfer of PURE risk to the
insurance company in consideration for a premium.
The chance of loss without any chance of gain is called - CORRECT ANSWER pure
risk
Speculative risk - CORRECT ANSWER has the possibility for gain or loss and is not
insurable.
Risk is defined as the - CORRECT ANSWER chance of loss.
A condition that could result in a loss is known as an - CORRECT ANSWER
exposure
A hazard is something that increases - CORRECT ANSWER the chance of loss.
The presence of a physical hazard - CORRECT ANSWER increases the chance of a
loss occurring.
A peril is - CORRECT ANSWER defined as a cause of loss, such as fire.
To be insurable, - CORRECT ANSWER losses must be calculable.
The law of large numbers - CORRECT ANSWER allows insurers to predict claims
more accurately.
The law of large numbers applies to - CORRECT ANSWER groups of people, not to
individuals.
The more people in the group, - CORRECT ANSWER the more accurate the
predictions are.
,Most insurers buy reinsurance - CORRECT ANSWER to protect themselves in the
event of a catastrophic loss.
Insurance laws are not required - CORRECT ANSWER to be uniform from one state
to another.
A stock insurer - CORRECT ANSWER may pay dividends to its shareholders
(stockholders), but they may not be guaranteed.
A reciprocal insurance company is managed by an - CORRECT ANSWER attorney-
in-fact.
An unincorporated association of individuals who insure each other is known as -
CORRECT ANSWER a reciprocal insurer.
The government offers insurance primarily based upon - CORRECT ANSWER social
needs, such as flood insurance and workers compensation, but does not offer
insurance for the purpose of preventing fraud.
A foreign company - CORRECT ANSWER has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - CORRECT
ANSWER an alien company.
A producer may be personally liable when - CORRECT ANSWER violating the
producer's contract.
Producers represent - CORRECT ANSWER the insurance company, not the insured.
Independent producers - CORRECT ANSWER own their own accounts and are not
insurance company employees.
Producers have - CORRECT ANSWER express, implied and apparent authority.
The authority a producer - CORRECT ANSWER has that is written in his or her
contract is known as express authority.
, A producer's binding authority (if any) - CORRECT ANSWER is expressed (written
down) in the producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - CORRECT ANSWER but is actual
authority the producer has to transact normal business activities, is known as
implied authority.
The elements of a legal contract may be remembered - CORRECT ANSWER by the
acronym C-O-A-L (consideration, offer, acceptance, legal purpose and legal
capacity).
A requirement for a valid contract - CORRECT ANSWER is offer and acceptance, or
mutual agreement.
Advertising the availability of insurance is not - CORRECT ANSWER considered to
be an offer.
A specific and definite proposal to enter into a contract is known as - CORRECT
ANSWER an offer.
The consideration on a policy need - CORRECT ANSWER not be equal.
A policy may not be voided - CORRECT ANSWER due to unequal consideration.
Under the consideration clause, - CORRECT ANSWER something of value must be
exchanged.
Because insurance contracts are contracts of adhesion, - CORRECT ANSWER policy
ambiguities always favor the insured.
Insurance policies are considered - CORRECT ANSWER to be unilateral contracts,
in that only one party makes an enforceable promise the insurer.
The principle of indemnity states - CORRECT ANSWER the purpose of insurance is
to restore the insured to the same position as before the loss occurred.
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