Insurance Awareness Questions – Set 12

Dear Aspirants,
Welcome to Insurance Awareness Questions in AffairsCloud.com. Here we are covering some important Insurance Awareness Questions & Answers with Explanations. Do study this questions thoroughly as it may prove to be helpful in upcoming exams and also in interviews.

1. A risk transfer mechanism whereby one party assumes the liability of another party by contract is known as ______
   A. Hold-Harmless Agreement
   B. Incontestability Provision
   C. Level Premium Insurance
   D. Limited Payment Life Insurance
   

   Answer & Explanation

   A. Hold-Harmless Agreement
   Explanation:
   A Hold Harmless Agreement is a contract between two parties designed to release one or both parties from legal claims.
   
   
2. A life insurance and annuity provision limiting the time within which the insurer has the legal right to void the contract on grounds of material misrepresentation in the policy application is termed as ________
   A. Hold-Harmless Agreement
   B. Incontestability Provision
   C. Level Premium Insurance
   D. Limited Payment Life Insurance
   

   Answer & Explanation

   B. Incontestability Provision
   Explanation:
   A provision in a life or Health Insurance policy that precludes the insurer from alleging that the policy, after it has been in effect for a stated period typically 2 or 3 years, is void because of misrepresentations made by the insured in the application for it.
   
   
3. A Life insurance policy for which the cost is equally distributed over the term of the premium period, remaining constant throughout is called _____
   A. Hold-Harmless Agreement
   B. Incontestability Provision
   C. Level Premium Insurance
   D. Limited Payment Life Insurance
   

   Answer & Explanation

   C. Level Premium Insurance
   Explanation:
   A policy for which the premiums do not change for the entire duration of the policy.
   
   
4. A form of whole-life insurance with a pre-defined number of premiums to be paid is known as ________
   A. Hold-Harmless Agreement
   B. Incontestability Provision
   C. Level Premium Insurance
   D. Limited Payment Life Insurance
   

   Answer & Explanation

   D. Limited Payment Life Insurance
   Explanation:
   A form of life insurance for which premiums are paid for a designated number of years.
   
   
5. Reinsurance placed with a company not authorized in the reporting company’s state of domicile is called _______
   A. Universal Life Insurance
   B. Unauthorized Reinsurance
   C. Underwriter
   D. Underwriting Risk
   

   Answer & Explanation

   B. Unauthorized Reinsurance
   Explanation:
   Reinsurance placed with a non-admitted reinsurer which is not licensed or approved in the jurisdiction in question.
   
   
6. A person who identifies, examines and classifies the degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate. That person is known as _______
   A. Universal Life Insurance
   B. Unauthorized Reinsurance
   C. Underwriter
   D. Underwriting Risk
   

   Answer & Explanation

   C. Underwriter
   Explanation:
   An underwriter is a company or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body.
   
   
7. A section of the risk-based capital formula calculating requirements for reserves and premiums is termed as _____
   A. Universal Life Insurance
   B. Unauthorized Reinsurance
   C. Underwriter
   D. Underwriting Risk
   

   Answer & Explanation

   D. Underwriting Risk
   Explanation:
   Underwriting risk refers to the potential loss to an insurer emanating from faulty underwriting.
   
   
8. An adjustable life insurance under which premiums and coverage are adjustable, company’s expenses are not specifically disclosed to the insured but a financial report is provided to policyholders annually is called _____
   A. Universal Life Insurance
   B. Unauthorized Reinsurance
   C. Underwriter
   D. Underwriting Risk
   

   Answer & Explanation

   A. Universal Life Insurance
   Explanation:
   Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy.
   
   
9. Which include claims that have been incurred but not reported?
   A. Universal Life Insurance
   B. Unauthorized Reinsurance
   C. Underwriter
   D. Unpaid losses
   

   Answer & Explanation

   D. Unpaid losses
   Explanation:
   The amount of the discounted unpaid losses as of the end of any taxable year shall be the sum of the discounted unpaid losses.
   
   
10. An amount of premium for which payment has been made by the policyholder but coverage has not yet been provided is known as ______
    A. Universal Life Insurance
    B. Unauthorized Reinsurance
    C. Unearned Premium
    D. Unpaid losses
    

    Answer & Explanation

    C. Unearned Premium
    Explanation:
    Unearned premium is the premium corresponding to the time period remaining on an insurance policy.
    
    

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