Free General Insurance Concepts Practice Questions
New Jersey Life exam — 75 practice questions.
Subtopics: Adverse selection, Law of large numbers, Utmost good faith, Reinsurance, 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, Representations, Concealment, Pure vs speculative risk, 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, 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
Read the General Insurance Concepts study guide
Sample questions & answers
1. In insurance, adverse selection describes the tendency of:
Higher-risk individuals to seek insurance more than average
Adverse selection is the tendency of higher-risk individuals to seek coverage more than average risks.
2. The law of large numbers helps insurers to:
Predict losses more accurately as the pool grows
As the number of similar exposures grows, predicted losses become more accurate.
3. Insurance contracts require utmost good faith, meaning both parties must:
Deal honestly and disclose material facts
Utmost good faith requires honest dealing and disclosure of material facts by both parties.
4. Which statement best describes reinsurance?
Insurance an insurer buys to transfer part of its risk
Reinsurance lets an insurer transfer a portion of its risk to another insurer.
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.
