Insurance Awareness Questions – Set 7

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. An agreement between an insurance company and an agent, granting the agent authority to write insurance from that company is called ________
   A. Affirmative Warranty
   B. Aggregate Limits
   C. Aleatory contract
   D. All-Risk Agreement
   
   Answer & Explanation

   A. Affirmative Warranty
   Explanation:
   An affirmative warranty is a statement regarding a fact at the time the contract was made.
   
   
2. Once an insurance company has paid up to the limit, it will pay no more during that year is known as _______
   A. Affirmative Warranty
   B. Aggregate Limits
   C. Aleatory contract
   D. All-Risk Agreement
   
   Answer & Explanation

   B. Aggregate Limits
   Explanation:
   An aggregate limit is the maximum dollar amount your insurer will pay to settle your claims.
   
   
3. _______ is legal contract in which the outcome depends on an uncertain event.
   A. Affirmative Warranty
   B. Aggregate Limits
   C. Aleatory contract
   D. All-Risk Agreement
   
   Answer & Explanation

   C. Aleatory contract
   Explanation:
   An aleatory contract is a contract in which the performance of one or both parties is contingent upon the occurrence of a particular event.
   
   
4. A property or liability insurance contract in which all risks of loss are covered is called _______
   A. Affirmative Warranty
   B. Aggregate Limits
   C. Aleatory contract
   D. All-Risk Agreement
   
   Answer & Explanation

   D. All-Risk Agreement
   Explanation:
   A property or liability insurance contract in which all risks of loss are covered except those specifically excluded.
   
   
5. The party to whom the rights of the insured under a policy are transferred is known as _______
   A. Policyholder
   B. Appointee
   C. Assignee
   D. Agent
   
   Answer & Explanation

   C. Assignee
   Explanation:
   A person to whom a right or liability is legally transferred.
   
   
6. A clause that allows the transfer of rights under a policy from one person to another, usually by means of a written document is called _____
   A. Assignment
   B. Automatic Treaty
   C. Arbitration
   D. Appraisal
   
   Answer & Explanation

   A. Assignment
   Explanation:
   Assignment is the means by which a life insurance policy holder can transfer rights of the policy to the assignee, in accordance with some terms and conditions.
   
   
7. A contract, such as an insurance contract, requiring that certain acts be performed if recovery is to be made is known as _______
   A. Conditional Contract
   B. Conditional Receipt
   C. Conditional Renewable
   D. Consequential loss
   
   Answer & Explanation

   A. Conditional Contract
   Explanation:
   A conditional contract is an agreement or contract conditional upon a specific event, the occurrence of which, at the date of the agreement, is uncertain.
   
   
8. A document given to an applicant for life insurance stating that the company’s acceptance is contingent upon determination of the applicant’s insurability is known as _______
   A. Conditional Contract
   B. Conditional Receipt
   C. Conditional Renewable
   D. Consequential loss
   
   Answer & Explanation

   B. Conditional Receipt
   Explanation:
   A receipt involved in life, health and certain property insurance contracts; if the insured is deemed to be covered by the insurer, the coverage begins on the date the insured receives the conditional binding receipt.
   
   
   
9. A policy that can be cancelled or have the premiums raised by the insurer on a specific anniversary date, subject to certain reasons written into the policy is known as ________
   A. Conditional Contract
   B. Conditional Receipt
   C. Conditional Renewable
   D. Consequential loss
   
   Answer & Explanation

   C. Conditional Renewable
   Explanation:
   A contract of health insurance stating that the policy is renewable under certain conditions as defined in the contract.
   
   
10. Losses other than property damage that occur as a result of physical loss to a business for example, the cost of maintaining key employees to help reorganize after a fire is called ________
    A. Conditional Contract
    B. Conditional Receipt
    C. Conditional Renewable
    D. Consequential loss
    
    Answer & Explanation

    D. Consequential loss
    Explanation:
    Consequential loss is considered an indirect loss as compared to losses from the direct damage.
    
    

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