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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

South Carolina Life exam — 47 practice questions.

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

Read the General Insurance Concepts study guide

Sample questions & answers

1. An insurance policy is called a contract of adhesion because:

It is written by the insurer and offered on a take-it-or-leave-it basis

In a contract of adhesion, one party (the insurer) writes the terms and the other party must accept or reject them as written.

2. Insurance contracts are described as aleatory because:

The dollar amounts exchanged by the parties may be unequal

An aleatory contract involves an exchange of unequal amounts; a small premium may yield a large benefit, or none, depending on chance.

3. The principle of utmost good faith in insurance requires:

Both parties to deal honestly and disclose material facts

Utmost good faith obligates both the insurer and the insured to act honestly and disclose all material facts.

4. A statement made by an applicant that is believed to be true to the best of their knowledge is a:

Representation

Representations are statements believed true to the best of the applicant's knowledge, as opposed to warranties, which are guaranteed true.

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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.