NEW
Font size
WorksheetsUnit 1 Checkpoint Exam
Total questions: 18
Worksheet time: 9mins
At the state level, the government is involved in providing
federal crop insurance
flood insurance
unemployment insurance
war risk insurance
Which of the following risk management methods is used by insurance companies?
Reduction
Sharing
Retention
Transfer
ABC insurance is licensed to sell insurance in Wisconsin. When a company is licensed in a state, it is considered
Certified
Admitted
Nonadmitted
Unauthorized
All of the following statements regarding mutual insurers are correct EXCEPT
Mutual insurers pay dividends to policyholders
Mutual insurers have stock and stockholders
Mutual insurers do not guarantee dividends
Mutual insurers are owned by their policyholders
Susan decides to drive fast in a horrible snowstorm because she knows that if she gets in an accident, her insurance will cover her. This is an example of
A physical hazard
A moral hazard
A situational hazard
A morale hazard
According to the law of agency, the person on whose behalf the insurance agent is called upon to act is called
The principal
The agent
The underwriter
The insured
All of the following statements regarding surplus lines insurers are correct EXCEPT
States keep a list of acceptable surplus lines insurers
Surplus lines insurance is placed with an admitted carrier by a surplus lines agent
Surplus lines insurance covers high-risk exposures
Surplus lines insurance is placed with a nonadmitted carrier by a surplus lines agent
Josephine sells insurance for one company and is an independent contractor, NOT an employee of the insured. She is
A direct writing agent
An independent agent
A captive agent
A general agent
Insurance is a contract that
Transfers the risk of financial loss from an insurance company to an individual or business
Transfers the risk of financial loss from an individual or business to an insurance company
Eliminates all hazards for an individual
Eliminates all risk for an individual
Which of the following represents a pure risk?
Gambling at a casino
Playing high-stakes poker with friends
A car accident
Investing money in the stock market
In an insurance contract, the second party is
The insured
The underwriter
The beneficiary
The insurer
All of the following are elements of insurable risks EXCEPT
The premium should be affordable
The premium must be calculable
The risk must be catastrophic for the insurance company
The risk must be noncatastrophic
If a house burns down in a fire, which of the following is the peril?
The fire
The insurer
The house
The insured
According to the law of large numbers, which of the following is TRUE?
The smaller the number of risks combined into one group, the larger the loss will be to an individual
The larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred
The larger the number of risks combined into one group, the smaller the loss will be to an individual
The smaller the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred
A bulk-mail insurance advertising brochure sent by the insurer to every home in one ZIP code is an example of
Direct response marketing
Personal advertising
Agent marketing
Producer marketing
Which of the following levels of agent authority is a written agreement with the insurer?
Apparent authority
Expressed authority
Assumed authority
Implied authority
A fiduciary is
A beneficiary
Another name for commingling
An account for funds
A person in a position of financial trust
ABC insurance is incorporated in Wisconsin, but is doing business in Florida. While in Florida, ABC insurance is classified as
An alien insurer
A foreign insurer
A domestic insurer
A nonresident insurer
