WorksheetsInsurance and Policy Basics Quiz
Total questions: 15
Worksheet time: 8mins
What is the primary purpose of insurance?
To transfer the risk of loss from an individual to an insurer
To guarantee financial gain
To eliminate all risks
To provide investment opportunities
What must exist between the policyowner and the insured at the time of application?
Insurable interest
Legal purpose
Contract of adhesion
Unilateral agreement
Which of the following is NOT an example of insurable interest?
Policyowner’s own life
Life of a family member
A random stranger
Business partners
What are the four elements of a legal contract?
Offer and acceptance, consideration, competent parties, legal purpose
Offer and acceptance, warranty, misrepresentation, legal purpose
Consideration, adhesion, warranty, legal purpose
Competent parties, adhesion, offer and acceptance, warranty
What is the binding force in an insurance contract?
Consideration
Offer and acceptance
Legal purpose
Competent parties
What type of contract is prepared by one party and accepted or rejected by the other?
Contract of adhesion
Aleatory contract
Unilateral contract
Conditional contract
What does the term 'aleatory' mean in the context of insurance contracts?
An exchange of unequal amounts or values
A contract prepared by one party
A legally binding promise by both parties
A contract with no conditions
What is a warranty in the context of insurance?
An absolutely true statement
A statement believed to be true to the best of one’s knowledge
An untrue statement in the application
A material misrepresentation
What must be provided to all applicants prior to accepting their initial premium?
Buyer’s guide
Policy summary
Fair Credit Reporting Act notice
HIPAA disclosure
What does the Fair Credit Reporting Act protect consumers against?
The circulation of inaccurate or obsolete information
The disclosure of nonpublic personal information
The transfer of risk of loss
The establishment of anti-money laundering standards
What is the purpose of underwriting in insurance?
To protect the insurer against adverse selection
To guarantee the lowest premium rates
To eliminate all risks
To ensure the policyholder’s satisfaction
What are the three primary factors used in premium determination?
Risk, interest, expenses
Risk, lifestyle, occupation
Mortality, underwriting, expenses
Health, occupation, lifestyle
What does the USA PATRIOT Act require insurers to establish?
Anti-money laundering standards
Privacy disclosures
Consumer reporting agencies
Risk classifications
What does the Gramm-Leach-Bliley Act (GLBA) stipulate regarding nonpublic personal information?
It may not be disclosed to a nonaffiliated third party
It must be disclosed to all parties
It must be shared with public health authorities
It must be disclosed to the insured’s employer
What is the privacy rule under HIPAA?
Patients have the right to view their own medical records
Patients must disclose their medical records to insurers
Patients must provide annual privacy disclosures
Patients must opt out of information sharing
