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Free General Insurance Concepts Practice Questions

Minnesota Life exam — 47 practice questions.

Subtopics: Law of large numbers, Adverse selection, Indemnity, Utmost good faith, Pure vs speculative risk, Hazards, Adhesion, Definition of risk, Hazard, Peril, Handling risk, Retention, Insurable risk, Stock insurer, Mutual insurer, Admitted insurer, Domestic foreign alien, Consideration, Legal purpose, Competent parties, Offer and acceptance, Express authority, Apparent authority, Representations, Concealment, Moral hazard, Morale hazard, Physical hazard, Implied authority, Fiduciary duty, Aleatory contract, Contract of adhesion, Unilateral contract, Conditional contract, Warranty, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Surplus lines insurer, Self-insurance

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Sample questions & answers

1. The principle that allows insurers to predict losses more accurately as the number of similar exposures increases is called what?

The law of large numbers

The law of large numbers states that as the number of similar independent exposures grows, the predictability of average losses improves.

2. The tendency of higher-risk individuals to seek insurance more than lower-risk individuals is known as what?

Adverse selection

Adverse selection is the tendency for those with greater-than-average risk to seek or keep coverage, which insurers manage through underwriting.

3. The principle that an insured should not profit from a loss but be restored to the prior financial position is called what?

Indemnity

Indemnity means restoring the insured to the financial position held before the loss without allowing a profit from insurance.

4. The expectation that both parties to an insurance contract will deal honestly and disclose material facts reflects which principle?

Utmost good faith

Insurance contracts are based on utmost good faith, requiring honesty and full disclosure of material facts by both parties.

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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.