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ABC insurance company receives an incomplete application and issues the policy anyway. Six months later ABC realizes the missing information. What term is used that prevents ABC from forcing the policyowner to answer further questions?
The principle of estoppel.
A situation in which a person can only lose or have no change represents
a pure risk.
Which of the following types of insurers is owned by stockholders?
A stock insurer.
An agent is acting ethically in all of the following situations EXCEPT
keeping customers best interests in mind
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
The characteristic of "conditionality."
What is a material misrepresentation?
A false statement made by an applicant that affects the insurer's decision to provide coverage.
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance?
Am best
Insurance is a contract by which one seeks to protect another from
Hazards
What is reinsurance?
an agreement between and originating insurer and a ceding insurer (current insuerer and a future)
The risk of loss may be classified as
pure risk and speculative risk
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
contracts of adhesion
An insured purchased an insurance policy 5 years ago. Last year, the insured received a dividend check from the insurance company that was not taxable. This year, the insurer did not send a check. From what type of insurer did the insured purchase the policy?
mutual
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT
the loss may be intentional
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next 2 years. What term best describes this act?
fraud
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
aleatory