AIL chapter 1 study set

All of the following are true about a stock insurance company EXCEPT:
A. It is a publicly owned, private organization with shareholders
B. Their policy holders vote for the members of the board of directors
C. Stock holders may or may not be policy holders
D. When declared, stock dividends are paid to stock holders

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B. Their policy holders vote for the members of the board of directors

Which of the following statements regarding mutual insurance companies is
CORRECT?
A. The policyholders are the owners and share in any company earnings
B. They have stockholders, but it is the policy owners who vote for the board of
directors
C. Bach policyholder assumes a share of the risk brought to the company by others
D. Shares of company stock are publicly traded

A. The policyholders are the owners and share in any company earnings

An insurance company that transfers a risk to another company is called
A. A reinsurer
B. The ceding company
C. The assuming company
D. A risk retention group (RRG)

B. The ceding company

An applicant submitted an application to an insurer without an initial premium. This
is considered
A. An offer
B. An acceptance
C. The insured's consideration
D. An invitation to make an offer

D. An invitation to make an offer

If an insurer wants to obtain an HIV test from an applicant
A. They can not use the applicant's HIV status to deny the application
B. They must obtain the applicant's written consent
C. They must notify the applicant's family of the results
D. They are not permitted to do an HIV test for life insurance

B. The must obtain the applicant's written consent

All of the following are true statements regarding representations EXCEPT?
A. A statement made to the insurer for the purpose of giving information
B. A statement that is guaranteed to be true
C. A statement that is true to the best knowledge of the applicant
D. A statement made to the insurer as an inducement to accept the risk

B. A statement that is guaranteed to be true

If one party in a contract gives a legally enforceable promise, but not the other, it is
called a
A. Conditional contract
B. Unilateral contract
C. Third party contract
D. Contract of adhesion

B. Unilateral contract

An insurance company incorporated in Indiana, with its home office in Texas, is
licensed to conduct business in all states except Pennsylvania. In Texas, this company
would best be described as which of the following type of insurers?
A. Domestic
B. Alien
C. Foreign
D. Regional

C. Foreign

Which of the following parties are not required to sign an application for life
insurance?
A. The applicant
B. The beneficiary
C. The agent
D. The insured (if different from the applicant)

B. The beneficiary

An insurance company doing business in the same state it was incorporated in is a
A. Domestic insurer
B. Foreign insurer
C. Resident insurer
D. Mutual insurer

A. Domestic insurer