MPJE PHARMACY LAW EXAM: FEDERAL LAW
QUESTIONS & CORRECT ANSWERS
Calculates rates and creates policy forms such as homeowners and auto for property and casualty insurers. - ANSWER-Insurance Services Office
governing org. for all state insurance commissioners, directors. Works towards standardization of insurance codes in various states. All legislation passed is non- binding on the states until passed by the state legislative. - ANSWER-National Association of Insurance Commissioners (NAIC)
organized under the laws of the same state in which they are domiciled. - ANSWER-Domestic Insurers
Formed under the laws of a different state from the one in which they are doing business. - ANSWER-Foreign Insurers
Formed under the laws of another country from the one in which they are doing business in. - ANSWER-Alien Insurers
Contract type that promises to pay an amount equal to the loss covered under the policy. - ANSWER-Indemnity Contract
Is a contract type which reimburses expenses. - ANSWER-Reimbursement Contract
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A contract type in which the insurer agrees to pay a specific sum of money no matter what the amount of loss may be. Ex. Life Insurance - ANSWER-Valued Contract
Selection of such a risk has a greater than average chance of producing a loss. - ANSWER-Adverse Selection
Legal impediment to one party denying the consequences of its own actions. - ANSWER-Estoppel
Insurance company must return any advanced unused premium paid by the policy owner if the insurance company terminates the contract before policy ends. - ANSWER-Pro-Rata
Uncertainty of a financial loss - ANSWER-Risk
Uncertain prospect of a financial gain or loss and are uninsurable. Ex. Lottery - ANSWER-Speculative Risk
Involving a chance of loss or no loss, but no gain, and are insurable. - ANSWER- Pure Risk
Ensures that an individual or business does not get involved in an activity leading to a potential financial loss. - ANSWER-Risk Avoidance
Is a method in which the individual or business assumes the expected losses from its own financial resources. - ANSWER-Risk Assumption
Transfer of risk to an insurance company. - ANSWER-Risk Transference
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