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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Minnesota Accident & Health exam — 45 practice questions.

Subtopics: Law of large numbers, Adverse selection, Utmost good faith, Aleatory contract, Representations, Risk definition, Morale hazard, Peril, Risk transfer, Stock insurer, Mutual insurer, Admitted insurer, Foreign insurer, Consideration, Legal purpose, Competent parties, Express authority, Apparent authority, Indemnity, Concealment, Contract of adhesion, Pure risk, Speculative risk, Physical hazard, Moral hazard, Implied authority, Fiduciary duty, Warranty, Misrepresentation, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Non-admitted insurer, Alien insurer, Unilateral contract, Conditional contract, Offer and acceptance, Insurable interest

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Sample questions & answers

1. The principle that loss predictions become more reliable as the number of similar exposures grows is called what?

The law of large numbers

The law of large numbers allows insurers to predict losses more reliably as the number of similar independent exposures increases.

2. The tendency of less healthy individuals to seek coverage more than healthier ones is called what?

Adverse selection

Adverse selection is the tendency for higher-risk individuals to seek or retain coverage, which insurers manage through underwriting.

3. The requirement that applicant and insurer deal honestly and disclose material facts reflects which principle?

Utmost good faith

Insurance contracts rest on utmost good faith, requiring honest dealing and disclosure of material facts by both parties.

4. An insurance contract is described as aleatory because what?

The values exchanged may be unequal depending on whether a loss occurs

An aleatory contract involves an exchange of unequal amounts, since the benefit paid depends on whether a covered loss occurs.

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Practice: General Insurance Concepts

Take a randomized, timed-style practice test. Answer choices are shuffled and your results are scored instantly with an explanation for every question.

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.