Insurance MCQ

A health insurance contract may be any of the following types of contracts, EXCEPT: a. An indemnity Contract b. A reimbursement contract (c.) A valued contract d. Limited benefit contract Answer: C

Which of the following terms is best defined as voluntarily surrendering a known right? a. Recission b. Subrogation c. Concealment (d.) Waiver Answer: D

All of the following statements are true regarding subrogation, EXCEPT: a. Subrogation is the right of the insurer to assume the rights of the insured. (b.) Subrogation applies primarily to life and health insurance, and seldom to property and casualty insurance. c. Subrogation is the right of the insurer to sue the responsible third party for damages inflicted upon the insured. d. Subrogation allows the insurer to sue for damages of negligence. Answer: B

Judy purchases a life insurance policy for her brother, James. The insurance agent, Jacob, uses Judy's premiums to pay his credit card bill. Who has committed fraud? a. Judy b. James (c.) Jacob d. Jacob and James Answer: C

Another term that means to void an insurance policy is: a. Subrogation b. Waiver and estoppel (c.) Recission d. Parol evidence rule Answer: C

What is the consequence for an applicant who makes an unintentional misrepresentation on a life insurance policy? a. The insurer will pay the entire death benefit. b. The insurer will void the policy. (c.) The insurer will pay the death benefit as long as the misrepresentation is not material to the risk. d. The insurer will pay one-half the death benefit. Answer: C

Insurance contracts sometimes contain ambiguities. Which of the following has not been taken to court for further interpretation? a. Reasonable expectations b. Ambiguities in a contract of adhesion c. Utmost good faith (d.) Subrogation Answer: D

The insurer does not include the suicide exclusion on Bob's policy. Bob commits suicide three months later, and the insurer refuses to pay the death benefit. Which of the following terms describes the insurer's inability to reclaim a waived right, and consequently the insurer's duty to pay the death benefit? a. Parol evidence rule b. Recission c. Waiver (d.) Estoppel Answer: D

John purchases a life insurance policy for his wife Jean. Which of the following best describes who is legally bound to the policy's promise of benefits? a. The insurer, John and Jean b. The insurer and John c. The insurer and Jean (d.) The insurer Answer: D

All of the following are required components of a legal contract, EXCEPT: (a.) Invitation to offer b. Acceptance c. Offer d. Consideration Answer: A

The __________ section of the contract states what the insurer will not do. This includes the risks that the insurer will not cover. a. Conditions b. Policy face c. Insuring clause (d.) Exclusions Answer: D

Benefits under a medical expense policy are provided through which of the following methods? (a.) Indemnity b. Cash payment c. Valued d. None of the above Answer: A

What are the basic elements of a legal contract? (a.) Offer, acceptance, consideration, competent parties and legal purpose b. Acceptance and consideration c. Policy face, insuring clause and adhesion d. Competent parties, acceptance and reasonable expectations Answer: A

Which of the following is not a primary component of an insurance contract? a. Policy exclusions b. Policy face c. Policy conditions (d.) Aleatory contrac Answer: D

Janice applies for a life insurance policy. She submits the application with the initial premium for $100,000 whole life. The agent returns the policy with a higher premium and hazardous occupation exclusion. What has the insurer made? a. Agreement b. Offer c. Invitation to offer (d.) Counter-offer Answer: D

Why are life and health insurance contracts said to be contracts of adhesion? (a.) Because the insurer writes the contract, to which the insured must adhere b. Because only the insurer is bound to the promises made in the policy c. Because one party has the potential to receive more than the other d. Because certain conditions must be met by all parties of the contract in order for it to be a legally binding contract Answer: A

Maria buys a life insurance policy for her husband, Fred. Of the following, which correctly describes the party legally bound to fulfill the policy's promise of paying benefits? a. The insured (b.) The insurer c. The insurer and Maria d. The insurer and Fred Answer: B

Insurance policies are based on: Select one: a. Tort law (b.) Contract law c. Negligence law d. Legal liability law Answer: B

Defamation occurs when: (a.) An individual or entity makes false, derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business b. An individual or entity acts to create a general action that in any way to intimidate an insurer in order to gain a monopoly in business c. An individual or entity refuses to insure or limit the amount of coverage only because another insurer has cancelled an existing policy on that person d. An individual or entity takes legal action against an insurer or producer Answer: A

The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called: a. Twisting b. Misrepresentation (c.) Churning d. Intimidation Answer: C