Question 1

Four states do not require people who sell insurance to be licensed.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is not a duty of an actuary?

Accepted Answer

A)  Calculate rates 
B)  Calculate dividends 
C)  Calculate loss reserves 
D)  Identify individual exposures that are going to have a loss 
A)  Calculate rates 
B)  Calculate dividends 
C)  Calculate loss reserves 
D)  Identify individual exposures that are going to have a loss D

Question 3

The Medical Information Bureau maintains information on people who have taken medical examinations in connection with the purchase of life insurance.

Accepted Answer

A) True 
 B)False  True

Question 4

Mathematicians specializing in insurance statistics are called "actuaries."

Accepted Answer

A) True 
 B)False

Question 5

Pro-rata reinsurance coverage may be either facultative or treaty.

Accepted Answer

A) True 
 B)False

Question 6

Legally, life insurance agents are not employees of the companies they represent.

Accepted Answer

A) True 
 B)False

Question 7

Ramone works as a claims adjuster. He is hired by insureds to evaluate their claims when they need his services. What kind of claims adjuster is Ramone?

Accepted Answer

A)  Independent 
B)  Public 
C)  Private 
D)  Reserve 
A)  Independent 
B)  Public 
C)  Private 
D)  Reserve

Question 8

Brokers generally stand in the same legal position as agents with respect to the power to bind the insurer to a property insurance contract.

Accepted Answer

A) True 
 B)False

Question 9

If Fidelity Reinsurance agrees to reinsure all autos that meet the underwriting rules specified in the contract with the primary insurer, this type of arrangement is:

Accepted Answer

A)  an automatic treaty 
B)  individually negotiated 
C)  excess of loss 
D)  facultative 
A)  an automatic treaty 
B)  individually negotiated 
C)  excess of loss 
D)  facultative

Question 10

Most states require licensed insurance agents to be at least age 18, to have good morals, and to pass an examination.

Accepted Answer

A) True 
 B)False

Question 11

Fergie is a salaried claims adjuster who works exclusively for Mutual of Kentucky Insurance. What kind of claims adjuster is Fergie?

Accepted Answer

A)  Independent 
B)  Public 
C)  Private 
D)  Direct 
A)  Independent 
B)  Public 
C)  Private 
D)  Direct

Question 12

The independent agent system:

Accepted Answer

A)  is used by direct writing companies 
B)  uses agents who own their own business 
C)  is used only in life insurance 
D)  requires agents to be paid a flat salary 
A)  is used by direct writing companies 
B)  uses agents who own their own business 
C)  is used only in life insurance 
D)  requires agents to be paid a flat salary

Question 13

Which of the following is not a valid reason to reinsure an exposure?

Accepted Answer

A)  To make insured exposures similar in dollar size 
B)  To provide the insured access to Lloyd's of London 
C)  To buy services from the reinsurer 
D)  To allow agents to be more competitive 
A)  To make insured exposures similar in dollar size 
B)  To provide the insured access to Lloyd's of London 
C)  To buy services from the reinsurer 
D)  To allow agents to be more competitive

Question 14

Brokers generally stand in the same position as life insurance agents with respect to the legal power to bind the insurer to a life insurance contract.

Accepted Answer

A) True 
 B)False

Question 15

An insurance broker legally represents the insurance consumer.

Accepted Answer

A) True 
 B)False

Question 16

Explain what a direct writer company is. Explain what the independent agency system is.

Accepted Answer

A direct writer company uses employee/ag

Question 17

Pro-rata reinsurance means:

Accepted Answer

A)  losses, premiums, and expenses are divided proportionately between the primary insurer and reinsurer 
B)  reinsurance is automatic 
C)  coverage is available at market rates 
D)  reinsurance is layered horizontally after the primary's retention 
A)  losses, premiums, and expenses are divided proportionately between the primary insurer and reinsurer 
B)  reinsurance is automatic 
C)  coverage is available at market rates 
D)  reinsurance is layered horizontally after the primary's retention

Question 18

Loss adjusters perform all the following functions except:

Accepted Answer

A)  investigate claims to determine if fraud is involved 
B)  negotiate with the insured on the amount of damage claims 
C)  recommend denial of claims 
D)  act as the company's lawyer if the case goes to court 
A)  investigate claims to determine if fraud is involved 
B)  negotiate with the insured on the amount of damage claims 
C)  recommend denial of claims 
D)  act as the company's lawyer if the case goes to court

Question 19

What is the difference between pro-rata reinsurance and excess of loss reinsurance?

Accepted Answer

Pro-rata proportionately shares the prem

Question 20

Which of the following pieces of information would be the LEAST useful to a property insurance underwriter?

Accepted Answer

A)  Age of the property owner 
B)  Age of the property 
C)  Use of the property 
D)  What the surrounding properties are like 
A)  Age of the property owner 
B)  Age of the property 
C)  Use of the property 
D)  What the surrounding properties are like

Exam 8: Insurance Functions

Four states do not require people who sell insurance to be licensed.

Which of the following is not a duty of an actuary?

The Medical Information Bureau maintains information on people who have taken medical examinations in connection with the purchase of life insurance.

Mathematicians specializing in insurance statistics are called "actuaries."

Pro-rata reinsurance coverage may be either facultative or treaty.

Legally, life insurance agents are not employees of the companies they represent.

Ramone works as a claims adjuster. He is hired by insureds to evaluate their claims when they need his services. What kind of claims adjuster is Ramone?

Brokers generally stand in the same legal position as agents with respect to the power to bind the insurer to a property insurance contract.

If Fidelity Reinsurance agrees to reinsure all autos that meet the underwriting rules specified in the contract with the primary insurer, this type of arrangement is:

Most states require licensed insurance agents to be at least age 18, to have good morals, and to pass an examination.

Fergie is a salaried claims adjuster who works exclusively for Mutual of Kentucky Insurance. What kind of claims adjuster is Fergie?

The independent agent system:

Which of the following is not a valid reason to reinsure an exposure?

Brokers generally stand in the same position as life insurance agents with respect to the legal power to bind the insurer to a life insurance contract.

An insurance broker legally represents the insurance consumer.

Explain what a direct writer company is. Explain what the independent agency system is.

Pro-rata reinsurance means:

Loss adjusters perform all the following functions except:

What is the difference between pro-rata reinsurance and excess of loss reinsurance?

Which of the following pieces of information would be the LEAST useful to a property insurance underwriter?

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

Filters