Free General Insurance Concepts Practice Questions
South Dakota Life exam — 76 practice questions.
Subtopics: Insurable interest, Adhesion, Aleatory, Valued contract, Law of large numbers, 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, Utmost good faith, Representations, Concealment, Pure vs speculative risk, Adverse selection, 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
Read the General Insurance Concepts study guide
Sample questions & answers
1. For a life insurance contract, insurable interest in the insured must exist:
At the time the policy is applied for and issued
Insurable interest must exist when the life contract is made; SDCL 58-10-3 requires a person insuring another's life to have an insurable interest at the time the contract was made.
2. An insurance policy is called a contract of adhesion because:
The insurer drafts it and the applicant accepts it as written
A contract of adhesion is drafted by one party and accepted or rejected by the other with no opportunity to bargain over its terms.
3. Insurance contracts are aleatory because:
Performance depends on an uncertain future event
An aleatory contract's performance depends on an uncertain event, so one party may pay far more or less than it receives. South Dakota defines insurance as a promise to pay upon determinable contingencies (SDCL 58-1-2(8)). The prior answer key was wrong.
4. Life insurance is generally considered a valued contract because it pays:
A stated face amount upon the insured's death
A valued contract pays a stated amount, such as the policy's face amount, rather than measuring an actual cash loss.
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.
