Free General Insurance Concepts Practice Questions
North Carolina Life exam — 80 practice questions.
Subtopics: Insurable interest, Utmost good faith, Adhesion, Aleatory, Representations, Adverse selection, Contract of insurance, Domestic, foreign, alien, Alien company, Definition of risk, Hazard, Peril, Handling risk, Retention, Insurable risk, Stock insurer, Mutual insurer, Admitted insurer, Domestic foreign alien, Consideration, Legal purpose, Competent parties, Offer and acceptance, Express authority, Apparent authority, Indemnity, Concealment, Pure vs speculative risk, Law of large numbers, Moral hazard, Morale hazard, Physical hazard, Implied authority, Fiduciary duty, Aleatory contract, Contract of adhesion, Unilateral contract, Conditional contract, Warranty, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Surplus lines insurer, Self-insurance, Exposure, Loss, Risk avoidance, Risk reduction, Risk sharing, Speculative risk, Homogeneous exposure units, Catastrophic loss, Domestic insurer, Alien insurer, Mutual dividends, Assessment mutual, Lloyd's, Government insurers, Insurer ratings, Captive agency system, Independent agency, Direct response, Managing general agent, Insurer as principal, Presumption of agency, Errors and omissions, Insurer consideration, Reasonable expectations, Fraud, Personal contract, Valued contract
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Sample questions & answers
1. For a life insurance policy to be valid, insurable interest must exist:
At the time of application
In life insurance, insurable interest must exist at the inception of the policy (application), unlike property insurance where it must exist at the time of loss.
2. The principle requiring both the applicant and insurer to deal honestly and disclose material facts is called:
Utmost good faith
Insurance contracts are based on utmost good faith, obligating both parties to honesty and full disclosure of material facts.
3. A life insurance contract is a contract of adhesion, which means:
The insurer drafts it and the applicant accepts or rejects it
A contract of adhesion is prepared by one party (the insurer) and offered on a take-it-or-leave-it basis; ambiguities are generally construed against the drafter.
4. Life insurance is described as an aleatory contract because:
The amounts exchanged may be unequal and depend on chance
An aleatory contract involves an exchange of unequal amounts; the insured pays premiums while the insurer may pay a much larger benefit if a covered event occurs.
Practice: General Insurance Concepts
Answer choices are shuffled every time, and every question comes with an explanation.
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
