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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Iowa Life, Accident & Health exam — 33 practice questions.

Subtopics: Stock insurer, Reinsurance, Risk avoidance, Speculative risk, Conditional contract, Handling risk, Insurable risk, Hazards, Definitions, Insurer classifications, Adverse selection, Elements of a contract, Legal interpretations, Law of large numbers, Indemnity, Aleatory contract, Contract of adhesion, Utmost good faith, Unilateral contract, Express authority, Apparent authority, Fiduciary duty, Reciprocal insurer, Estoppel, Insurable interest timing

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Sample questions & answers

1. An insurance company owned by its stockholders that may pay taxable dividends to those owners is a:

Stock insurer

A stock insurer is owned by stockholders who may receive taxable dividends on their shares.

2. When an insurer transfers part of the risk it has assumed to another insurer, the arrangement is called:

Reinsurance

Reinsurance is the transfer of part of an insurer's assumed risk to another insurer.

3. Choosing not to engage in an activity in order to eliminate the chance of an associated loss is an example of risk:

Avoidance

Risk avoidance eliminates the chance of loss by not undertaking the activity that creates the exposure.

4. A situation involving the chance of either a loss or a gain, such as gambling, is known as:

Speculative risk

Speculative risk involves the possibility of gain as well as loss and is generally not insurable.

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Practice: General Insurance Concepts

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Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.