#1
What is the primary purpose of insurance?
To generate profit for insurance companies
To transfer risk from individuals to the insurer
To provide guaranteed returns on investment
To increase taxes for the insured
#2
Which of the following is NOT a type of insurance?
Life insurance
Health insurance
Investment insurance
Property insurance
#3
What is the purpose of an insurance claim?
To prevent losses from occurring
To transfer risk to the insured
To request compensation for a covered loss
To cancel an insurance policy
#4
Which type of insurance covers medical expenses resulting from an accident?
Life insurance
Health insurance
Auto insurance
Travel insurance
#5
Which of the following is a characteristic of term life insurance?
Provides coverage for a specific period of time
Builds cash value over time
Can be cashed out at any time
Requires a medical exam for approval
#6
What is the purpose of an insurance binder?
To bind the insured to the insurance contract
To provide temporary insurance coverage until a policy is issued
To amend an existing insurance policy
To determine the value of insured property
#7
What does 'premium' refer to in insurance?
The total amount of coverage provided by the policy
The amount the policyholder pays for insurance coverage
The deductible paid by the insurer
The maximum amount the insurer will pay for a claim
#8
What is the concept of 'indemnity' in insurance?
The process of compensating for a loss by payment
The ability of the insurer to cancel a policy
The exclusion of certain risks from coverage
The requirement for the policyholder to disclose all information truthfully
#9
Which principle of insurance states that the insured should not profit from a loss?
Principle of indemnity
Principle of utmost good faith
Principle of subrogation
Principle of insurable interest
#10
What is the purpose of the 'deductible' in insurance?
To reduce the premium cost
To determine the maximum coverage limit
To eliminate coverage for certain risks
To share the risk between the insured and the insurer
#11
Which type of insurance provides coverage for damage to one's own vehicle in an accident?
Liability insurance
Comprehensive insurance
Collision insurance
Health insurance
#12
What is 'underwriting' in insurance?
The process of assessing and pricing risk for insurance policies
The investigation of insurance claims
The distribution of insurance products to consumers
The calculation of insurance premiums
#13
What is the purpose of reinsurance?
To insure high-risk individuals
To transfer risk from the insurer to another insurer
To provide insurance for natural disasters
To insure against investment losses
#14
What is 'subrogation' in insurance?
The process of transferring insurance policies
The right of the insurer to recover costs from a third party
The calculation of insurance premiums
The exclusion of certain risks from coverage
#15
What is the primary function of an insurance broker?
To underwrite insurance policies
To sell insurance policies directly to consumers
To represent the interests of the insured in finding suitable coverage
To invest insurance premiums in financial markets
#16
What does 'actuary' refer to in the insurance industry?
A professional who assesses and manages risk using mathematical and statistical methods
An insurance policy with guaranteed returns
A type of insurance fraud
A government agency that regulates insurance companies
#17
What is 'moral hazard' in insurance?
The intentional creation of a loss to collect insurance benefits
The risk of loss due to natural disasters
The increase in risk due to insured individuals behaving differently
The uncertainty surrounding insurance claims
#18
What is 'policyholder surplus' in insurance?
The amount of coverage provided by an insurance policy
The maximum amount the insurer will pay for a claim
The difference between an insurance company's assets and liabilities
The premium paid by the policyholder