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If an agent fails to obtain the application's signature on the insurance application, what must the insurer do?
Send the application back to the applicant for signature
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An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer's classification in Nevada?
Foreign
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Wagering on a sporting even is know as what type of risk?
Speculative
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According to the law of Agency, a principal is represented by whom?
Agent or Producer
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Whom does an insurance agent represent?
Insurance Company
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What entities make up the Medical Information Bureau?
Insurers
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What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the insurance contract is based
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What are the three types of hazards?
Physical, moral and morale
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What do individuals use to transfer their risk of loss to a larger group?
Insurance
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When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
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Who owns stock companies?
Stockholders
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In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
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The requirements that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
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A situation in which a person can only experience a loss and no gain presents what type of risk?
Pure risk
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The type of insurance company organized to return any surplus money to its policyholders is know as what?
Mutual company
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What are the strategies used by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
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A person who does not lock the doors to his or her house shows and indifferent attitude. This person presents what type of hazard?
Morale
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Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, foreign, and alien
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What type of insurer is formed under the laws of another country?
Alien
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Conditions that increase the chance of a loss are known as what?
Hazards
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A situation in which a person can only experience a loss and no gain presents what type of risk?
Pure risk
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An insurance company that is formed under the laws of another state is known as what type of insurer?
Foreign
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What is the term for the causes of loss insured against in an insurance policy?
Peril
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What are the five characteristics of an ideally insurable risk?
Lost must be:
- 1) Due to chance
- 2) Definite and measurable
- 3) statistically predictable
- 4) not catastrophic
- 5) Coverage cannot be mandatory
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What are the strategies use by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting at a higher rate
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An applicant conceals relevant health information on the application. The applicant presents what type of hazard?
Moral
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When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
Insurer
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What document is required for an insurance company to transact insurance?
Certificate of Authority
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What are the three types of agent authority?
Express, implied and apparent
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What is the warranty in an insurance contract?
An absolutely true statement upon which the validity of the insurance contract is based
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Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agent's
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what type of risk is insurable?
Pure
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In the agent/insurer relationship, who is considered the principal?
Insurer
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What entities make up the Medical Information Bureau?
Insurers
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What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
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If an applicant does not receive his or her insurance policy, who would be held responsible?
The agent
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When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
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When risks with higher probability of loss are seeking insurance more often than risks, this is known as what?
Adverse selection
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When a change needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application
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Insurance is a contract that protects the insured from what?
Loss
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An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?
Mutual
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What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion
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What do individuals use to transfer their risk of loss to a larger group?
Insurance
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In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
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In forming an insurance contract, when does the acceptance usually occur?
When the insurer approves a prepaid application
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What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
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For the purpose of insurance, what is risk?
Uncertainty of loss
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If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorize or admitted
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The insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
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The reduction, decrease, or disappearance of value of the person or property insured in a policy is know as what?
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