Primerica Life Insurance License Questions & Answers
Which law is the foundation of statistical prediction of loss upon which rates for insurance are calculated?
- Law of Group Evaluation
- Law of Large Numbers
- Law of Masses
- Law of Averages
(Ans- B) Law of Large Numbers
A producer who fails to segregate premium monies from his own personal
funds is guilty of:
- Theft
- Commingling
- Larceny
- Embezzlement
(Ans- B) Commingling
In insurance, an offer is usually made when:
- The completed application is submitted.
- The insurer approves the application and receives the initial premium
- The agent hands the policy to the policyholder.
- An agent explains a policy to a potential applicant.
(Ans- A) The completed application is submitted.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
- Mutual
- Reciprocal
- Nonprofit service organization 1 / 2
- Stock
(Ans- A) Mutual
Which of the following insurance options would be considered a risk- sharing arrangement?
- Stock
- Mutual
- Surplus Lines
- Reciprocal
(Ans- D) Reciprocal
On a participating insurance policy issued by a mutual insurance company,
dividends paid to policy holders are:
- Guaranteed
- Not taxable since the IRS treats them as a return of a portion of the
premium paid.
- Paid at a fixed rate every year.
- Taxable as ordinary income.
(Ans- B) Not taxable since the IRS treats them as a return of a portion of the premium paid.
If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
- Nonforfeiture
- Indemnity
- Reasonable expectations
- Cease and desist
(Ans- C) Reasonable expectations
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