Prepare for the Alabama Life and Health Insurance License exam with these practice questions and answers. This guide covers life insurance policies, health insurance regulations, and Alabama insurance laws.
Q: The Fair Credit Reporting Act
Answer: what law protects consumers from the circulation of inaccurate or obsolete information?
Q: domestic, foreign, and alien
Answer: Insurers are classified according to their domicile. What are the 3 types of insurers?
Q: Fraternal insurer
Answer: what type of insurer is a voluntarily formed organization that provides religious organizations with a representative form of government?
Q: mutual company
Answer: the type of insurance company organized to return any surplus money to its policyholders is known as what?
Q: Insurer
Answer: when agents act within the scope of their contract, their actions will be assumed to be the actions of whom?
Q: underwriting
Answer: what is the name of the process that insurance companies use to determine if an applicant is insurable?
Q: provide the aplicant with a Disclosure Authorization Notice
Answer: if an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?
Q: Alien
Answer: what type of insurer is formed under the laws of another country?
Q: adverse selection
Answer: when risks with higher probability of loss are seeking insurance more often than other risks, is known as what?
Q: when to policy is delivered and the premium is paid.
Answer: when does an insurance policy go into effect?
Q: an agent or producer
Answer: according to the Law of Agency, a principal is represented by whom?
Q: pure
Answer: what type of risk is insurable?
Q: stockholders
Answer: who owns stock companies?
Q: Insurers
Answer: what entities make up the Medical Information Bureau?
Q: complete a new application of ask the applicant to initial the correction on the original application
Answer: when a change needs to be made on the application for insurance, which is the best method for correcting the information?
Q: Certificate of Authority
Answer: in order to transact insurance within a given sate, an alien insurer must first obtain what?
Q: Loss
Answer: Insurance is a contract that protects the insured from what?
Q: when the application is submitted
Answer: in insurance, when is the offer usually made on a contract?
Q: stock company
Answer: the insurer organized to return a profit to the stockholders is what type of insurer?
Q: when the insurer approves a prepaid application
Answer: in forming an insurance contract, when does an acceptance usually occur?
Q: Foreign
Answer: an insurance company that is formed under the laws of another state is known as what type of insurer?
Q: financial responsibility for loss
Answer: insurance is used to transfer what to the company?
Q: inspection report
Answer: what type of report provided information about the applicants hobbies, habits, and financial status?
Q: Certificate of Authority
Answer: what document is required for an insurance company to transact insurance?
Q: Certificate of Authority
Answer: a state issued document empowering an insurance company to become an admitted insurer is called what?
Q: Insurance
Answer: what do individuals use to transfer their risk of loss to a larger group?
Q: Insurer
Answer: in the agent/insurer relationship, who is considered the principal?
Q: insurance company
Answer: whom does an insurance agent represent?
Q: express, implied and apparent
Answer: what are the three types of agent authority?
Q: moral
Answer: what type of hazard does an applicant present when they conceal health information?
Q: mutual
Answer: an insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?
Q: Loss
Answer: the reduction, decrease, or disappearance of value of the person or property insured is a policy is known as what?
Q: physical moral, and morale
Answer: what are the 3 types of hazards?
Q: send it back to the applicant to get the signature
Answer: if an agent fails to obtain the applicants signature on the application, what must an insurer do?
Q: insurable interest and consent
Answer: what two elements are necessary for a life insurance contract to have a legal purpose
Q: when it is intentional and material
Answer: when would a misrepresentation on an insurance application be considered fraud?
Q: uncertainty of loss
Answer: for the purpose of insurance, what is risk?
Q: the agent’s
Answer: whose responsibility is it to determine that all the questions on an application are answered?
Q: restriction of coverage; refusal to accept risk; accepting a risk at a higher rate
Answer: what are the strategies used by underwriters to prevent adverse selection?
Q: foreign
Answer: an insurance company is domiciled in California and transacts business in Nevada. what is the insurer’s classification in Nevada?
Q: speculative
Answer: wagering on a sporting event is known as what type of risk?
Q: loss must be:due to chance,definite and measurable, statistically predictable,not catastrophic,coverage cannot be mandatory
Answer: what are the 5 characteristics of an ideally insurable risk?
Q: morale
Answer: a person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?
Q: pure risk
Answer: a situation in which a person can only experience a loss and no gain presents what type of risk?
Q: agreement (offer and acceptance), consideration, competent parties, and legal purpose
Answer: what are the 4 elements of an insurance contract?
Q: peril
Answer: what is the term for the causes of loss insured against an insurance policy?
Q: hazards
Answer: conditions that increase the chance of loss are known as what?
Q: the agent
Answer: if an applicant does not receive his policy, who would be held responsible?
Q: Law of Large Numbers
Answer: what law is the foundation of the statistical prediction of loss upon which rates for insurance is calculated?
Q: return it to the applicant for completion
Answer: what is the best way to handle incomplete insurance applications?