L/H UNIT 1 CHECKPOINT

C) a person in a position of financial trust
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Terms in this set (18)
C) a person in a position of financial trust
A fiduciary is

A) a beneficiary

B) another name for commingling

C) a person in a position of financial trust

D) an account for funds
C) 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
According to the law of large numbers, which of the following is TRUE?

A) the smaller the number of risk combined into one group, the larger the loss will be to an individual

B) the larger the number of risks combined into one group, the small the loss will be to an individual

C) 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

D) 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
D) a car accident
Which of the following represents a pure risk?

A) investing money in the stock market

B) playing high-stakes poker with friends

C) gambling at a casino

D) a car accident
A) a morale hazard
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) a morale hazard

B) a situational hazard

C) a physical hazard

D) a moral hazard
C) the principal
According to the law of agency, the person on whose behalf the insurance agent is called upon to act is called

A) the agent

B) the insured

C) the principal

D) the underwriter
C) a captive agent
Josephine sells insurance for one company and is an independent contractor, NOT an employee of the insurer. She is

A) a direct writing agent

B) a general agent

C) a captive agent

D) an independent agent
B) transfer
Which of the following risk management methods is used by insurance companies?

A) reduction

B) transfer

C) retention

D) sharing
C) the fire
If a house burns down in a fire, which of the following is the peril?

A) the house

B) the insurer

C) the fire

D) the insured
B) the risk must be catastrophic for the insurance company
All of the following are elements of insurable risk EXCEPT

A) the premium should be affordable

B) the risk must be catastrophic for the insurance company

C) the risk must be non-catastrophic

D) the premium must be calculable
A) direct response marketing
A bulk-mail insurance advertising brochure sent by the insurer to every home in one ZIP code is an example of

A) direct response marketing

B) personal advertising

C) agent marketing

D) producer marketing
D) unemployment insuranceAt the state level, the government is involved in providing A) federal crop insurance B) flood insurance C) war risk insurance D) unemployment insuranceA) express authorityWhich of the following levels of agent authority is a written agreement with the insurer? A) express authority B) assumed authority C) implied authority D) apparent authorityB) mutual insurers have stock and stockholdersAll of the following statements regarding mutual insurers are correct EXCEPT A) mutual insurers pay dividends to policyholders B) mutual insurers have stock and stockholders C) mutual insurers are owned by their policyholders D) mutual insurers do not guarantee dividendsB) admittedABC Insurance is licensed to sell insurance in Wisconsin. When a company is licensed in a state, it is considered A) approved B) admitted C) unauthorized D) non-admittedD) the insurerIn an insurance contract, the second party is A) the insured B) the underwriter C) the beneficiary D) the insurerA) surplus lines insurance is placed with an admitted carrier by a surplus lines agentAll of the following statements regarding surplus lines insurers are correct EXCEPT A) surplus lines insurance is placed with an admitted carrier by a surplus lines agent B) surplus lines insurance is placed with a non admitted carrier by a surplus lines agent C) states keep a list of acceptable surplus lines insurers D) surplus lines insurance covers high-risk exposuresD) a foreign insurerABC Insurance is incorporated in Wisconsin, but is doing business in Florida. While in Florida, ABC Insurance is classified as A) a domestic insurer B) an alien insurer C) a nonresident insurer D) a foreign insurerD) transfers the risk of financial loss from an individual or business to an insurance companyInsurance is a contract that A) eliminates all hazards for an individual B) transfers the risk of financial loss from an insurance company to an individual or business C) eliminates all risk for an individual D) transfers the risk of financial loss from an individual or business to an insurance company