FREE RIBO Insurance Fundamentals Test 1
What does an "endorsement" refer to in an insurance policy?
An endorsement is a written document that modifies the terms of an insurance policy, adding or changing coverage, exclusions, or conditions.
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this?
Participating policies give the policy owner the right to share in the insurer's surplus.
Which of the following is Not a characteristic of reinsurance?
All of these are reinsurance features except Increases the unearned premium reserve
Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event?
An insurance policy is a contract where one party promises to indemnify another against loss that arises from an unknown event.
When a mutual insurer becomes a stock company, the process is called
The process whereby a mutual insurer becomes a stock company is called demutualization.
AAA Insurance Company has transferred a portion of its loss exposure to BBB Insurance Company. In this reinsurance transaction, what is AAA Insurance Company called?
In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called the primary insurer.
Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures?
An insurer established and owned by a parent firm for the purpose of insuring the parent firm's loss exposures is known as a captive insurer
One important function of an insurance company is to identify and sell to potential customers. Which of these BEST describes this function?
Marketing can be best defined as identifying and selling to potential customers.
A participating company is also referred to as which type of insurer?
A mutual insurer is also referred to as a participating company.
What is a participating life insurance policy?
A participating life insurance policy is defined as a contract that allows the policy owner to receive a share of surplus in the form of policy
Which of the following is a type of insurance where an insurer transfers loss exposures from policies written for its insureds?
Reinsurance is an arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer.