Oklahoma Life Health & Accident-Law Practice Exam #1

An insurance company incorporated under the laws of the State of Oklahoma would be considered a(n):
a. interstate insurer
b. alien insurer
c. domestic insurer
d. foreign insurer

An insurer formed under the laws of Switzerland, authorized to do business in the State of Oklahoma, and holding an Oklahoma Certificate of Authority would be referred to as:
a. unauthorized insurer
b. non-admitted insurer
c. foreign insurer
d. alien insurer

If a licensed insurance producer dies, which of the following would be able to receive a temporary producer license?
a. the new owner of the agency
b. the surviving spouse
c. best friend of the producer
d. representative of the insurer

Which of the following situations is subject to replacement regulations?
a. sale of a group life policy that causes an existing group policy to be lapsed.
b. sale of an individual life policy that causes an existing individual life policy to be lapsed.
c. converting an existing Term life plicy to Universal Life Policy with same insurer.
d. sale of an individual life policy that causes a non-convertible term policy to lapse.

Which of the following is NOT a risk management technique?
a. retain the risk
b. avoid the risk
c. reduce the risk
d. ascertain the risk

Which of the following is NOT true regarding insurance?
a. it is a social device for transferring the risk
b. insurance is a device for handling speculative risk
c. insurance transfers risk from individuals to a group
d. a large uncertain loss is traded for a small certain loss

The Telephone Consumer Protection Act (aka Do Not Call Registry) applies to which of the following entities call consumers at home?
a. charities
b. political parties
c. insurance company representatives
d. charitites, political parties and insurance company representatives.

An individual licensed as a life producer would be authorized to perform all of the following EXCEPT?
a. sell life insurance coverage
b. solicit life insurance coverage
c. confer life insurance coverage
d. bind life insurance coverage

Insurance is considered which type of risk management technique?
a. retention
b. avoidance
c. transfer
d. reduction

A producer has a responsibility to act in the best interest of the insured.  This responsibility is known as:
a. fiduciary obligation
b. agency responsibility
c. presumed authority
d. express authority

Which of the following is NOT true regarding the responsibilities of a producer to the insurer under agency law?
a. a producer receives unlimited authority from the insurer
b. a producer must disclose all material facts to the insurer
c. a producer acts on behalf of the insurer
d. knowledge of a producer is considered to be knowledge of the insurer

All of the following are element necessary to the formation of a binding legal contract EXCEPT?
A. signatures of both parties
B.  an offer made and the acceptance
C. legal purpose
D. trade of value

Which of the following is NOT advertising?
a. printed sales brochure
b. television advertising with third party testimonial
c. presentation brochure
d. a letter to an existing insured when it does not urge them to increase coverage

All of the following are elements of an insurable risk EXCEPT?
a. loss must be intentional
b. catastrophic loss exposure such as war must be excluded
c. large number of exposure units
d. economically feasible premium

Policy replacement regulations would govern which of the following?
a. replacing a credit life policy
b. replacing a whole life policy
c. replacing a short term, non renewable health policy
d. converting a term policy to a whole life policy

Which of the following statements is true regarding a producer selling insurance for a fraternal insurer?
a. no license is required if annual commissions are less than $25,000
b. continuing education requirement is eight (8) hours per year
c. to receive a commission, the producer must be licensed and have an insurer appointment
d. the producer must be a minimum of 21 years of age to be licensed

Which of the following is NOT true regarding a "speculative risk"?
a. insurance can be written on speculative risk
b. gambling is associated with speculative risk
c. speculative risk has a possibility of gain
d. speculative risk has possibility for loss

All of the following are sources of regulation of the insurance business EXCEPT?
a. state regulation
b. federal regulation
c. unilateral practice
d. self-regulation

The Life & Health Guaranty Association would cover policies issued by which of the following types of insurers?
a. non profit hospital
b. alien insurer
c. medical service organization
d. fraternal benefit society

Which of the following policies would be subject to the "Policy Replacement Law"?
a. canceling a policy that the client purchased from a financial institution to cover a car loan
b. allowing a whole life policy to lapse to purchase another whole life policy
c. converting a term policy to a whole life policy
d. changing jobs and losing group life coverage

A producer's license can be revoked for any of the following EXCEPT?
a. misrepresentation on the license application
b. accused of a felony
c. delinquent on Oklahoma income tax
d. delinquent on court-ordered child support

A legally binding contract requires that each party give something of value to the other; this essential element is called:
a. agreement
b. adhesion
c. warrantee
d. consideration

Blue Cross/Blue Shield is considered what type of insurer?
a. health maintenance organization
b. mutual insurers
c. medical service organization
d. fraternal

A producer's responsibilities include all fo the following EXCEPT?
a. delivering the policy
b. changing provisions in the policy
c. explaining the policy provisions
d. collecting the initial premium for the policy

Which of the following is false about a stock insurance company?
a. stockholders elect the Board of Directors
b. ownership is by the stockholders
c. officers and directors manage the company
d. policy owners have voting rights

All of the following activities would be considered misrepresentation, EXCEPT?
A. insurer advertises a life insurance contract as a retirement investment plan
B. producer states that dividends paid for the past five years were 5%
C. producer states the policy owner can borrow from his/her life insurance policy without paying any interest
D. producer promises that dividends paid by a mutual insurance company are guaranteed

When must an "insurable interest" exist in life insurance?
a. at the time the application is completed
b. at the birth of insured
c. at the time of applications and at death of the insured
d. at the time of death of insured

Which of the following is true regarding mortality tables?
a. mortality tables assume everyone is statically dead at age 85
b. mortality tables predict the probability of losses based on the number of deaths in a given year
c. mortality tables can predict individual losses
d. mortality tables are no longer used in calculating life insurance rates

The law of large numbers states that:
a. large losses are easier to predict
b. larger the number of units considered, the more predictable are the losses
c. predictions become less accurate as larger numbers of losses are considered
d. all losses can be predicted

Which of the following statements is correct regarding Amanda, a licensed producer, who lives in Oklahoma and wants to sell a life insurance policy in Kansas?
a. must have an Oklahoma resident license only
b. must have a Kansas resident license only
c. must have an Oklahoma resident license and a Kansas non-resident license
d. must have a Kansas non-resident license only

The insurance company writes the insurance policy and the insured must comply with the contract terms without negotiation.  the courts will interpret any ambiguity in favor of the insured.  What is the name of this unique contractual feature?
a. conditional contract
b. unilateral contract
c. contract of adhesion
d. contract of utmost good faith

An insurance policy is a contract of adhesion, written by the insurer.  If the language is unclear, courts will interpret any ambiguity in favor of:
a. insurer
b. broker
c. underwriter
d. insured

Regarding a replacement transaction, all of the following are duties of the insurance company, EXCEPT?
a. maintaining copies of replacement materials for a period of three (3) years
b. notify in writing the existing insurer of the pending replacement situation
c. guarantee a free look for a minimum of twenty (20) days
d. report the replacement to the Life & Health Guarantee Association

Who is the Oklahoma Insurance Commissioner:
a. John Doak
b. Berry Switzer
c. Drew Edmonds
d. Mary Fallin

Which of the following would NOT have an insurable interest in the life that is being insured?
a. person insuring his own life
b. spouse insuring an ex-spouse
c. business owner insuring his partner
d. voter insuring the life of the President  

An insurance company that is owned by the policy owners who receive the company's profits int he form of dividends is a(n):
a. stock insurer
b. mutual insurer
c. alien insurer
d. fraternal insurer

Which of the following is the primary source of regulations of the insurance industry?
a. Federal Government
b. State Government
c. National Association of Insurance Commissioners (NAIC)
d. State of Oklahoma Agents Association

Which of the following individuals would NOT be considered incompetent?
a. child in the first grade selling Kool-Aid
b. person committed to a mental hospital
c. convicted felon currently serving time in prison
d. intoxicated person

A shareholder is to stock insurer as a policy owner is to a:
a. fraternal insurer
b. mutual insurer
c. admitted insurer
d. domestic insurer

Which of the following in NOT a responsibility the producer has to his/her insured?
a. explain the policy provisions thoroughly
b. invest insurer's premium
c. identify types of risk exposures client faces
d. comply with state laws

Consideration is a trade of value between parties and is a requirement to have a legally binding contract.  The insured's consideration in a life insurance contract is:
a. payment of premium
b. truthful statements on the application
c. truthful statements on the application and payment of premium 
d. truthful statements on the application, payment of premium, and being insurable

Which of the following is required to become a licensed Oklahoma resident producer?
a. reside in the State of Oklahoma for a minimum of 90 days
b. have 180 days experience in the insurance business
c. pass a licensing exam with a score of 70% or better
d. be at least 21 years of age

The definition of risk is:
a. potential for loss
b. something that increases the chance for loss
c. cause of loss
d. monetary exposure

Which of the following policies would be subject to the "Policy Replacement Law?" 
a. canceling a policy that the client purchased from a financial institution to cover a car loan
b. allowing a whole life policy to lapse to purchase another whole life policy
c. converting a term policy to a whole life policy
d. changing jobs and losing group life coverage

A producer who lives in another state is called:
a. foreign agent
b. unauthorized agent
c. secret agent
d. non-resident agent

An insurer licensed to sell insurance in Oklahoma is referred to as:
a. approved insurer
b. non-admitted insurer
c. admitted insurer
d. surplus lines insurer

An insurer may be examined as often as necessary.  Who decides when an exam is necessary?
a. governor
b. president of the insurer
c. Insurance Commissioner
d. state statutes

Which of the following is a producer's primary responsibility under Agency Law?
a. complete the application and confirm the information is correct
b. identify types of risk exposures the prospects face from a financial needs approach
c. contact prospects during the appropriate times according to the Do Not Call Registry
d. sell the best policy for the policy owner

After a hearing, the Oklahoma Insurance Department can suspend a producer's license for all of the following reasons, EXCEPT?
a. misrepresentations on the producer's license application
b. incompetence
c. accused of a felony
d. embezzling funds from a beneficiary

All fo the following are true regarding the National Association of Insurance Commissioners (NAIC) EXCEPT?
a. non profit organization
b. voluntary organization
c. state mandated organization
d. promotes uniformity among states