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A fiduciary is A) another name for commingling B) a beneficiary C) an accounts for funds D) a person in a position of financial trust - Correct Answer ✅D At the state level, the government is involved in providing A) war risk insurance B) unemployment insurance C) flood insurance D) federal crop insurance - Correct Answer ✅B In an insurance contract, the second party is A) the insurer B) the insured C) the beneficiary D) the underwriter - Correct Answer ✅A ABC Insurance is incorporated in Wisconsin, but is doing business in Florida. While in Florida, ABC Insurance is classified as

A) a domestic insurer B) a nonresident insurer C) an alien insurer D) a foreign insurer - Correct Answer ✅D All of the following statements regarding surplus lines insurers are correct EXCEPT A) surplus lines insurance covers high-risk exposures B) surplus lines insurance is placed with an admitted carrier by a surplus lines agent C) states keep a list of acceptable surplus lines insurers D) surplus lines insurance is placed with a nonadmitted carrier by a surplus lines agent - Correct Answer ✅B ABC Insurance is licensed to sell insurance in Wisconsin. When a company is licensed in a state, it is considered A) approved B) unauthorized C) admitted D) nonadmitted - Correct Answer ✅C Josephine sells insurance for one company and is an independent contractor, NOT an employee of the insurer. She is

A) a captive agent B) a general agent C) a direct writing agent D) an independent agent - Correct Answer ✅A Susan decides to drive fast in a horrible snowstorm because she knows that if she gets in an accident, her insurance will cover her. This is an example of A) a physical hazard B) a moral hazard C) a situational hazard D) a morale hazard - Correct Answer ✅D Which of the following risk management methods is used by insurance companies? A) retention B) transfer C) sharing D) reduction - Correct Answer ✅B If a house burns down in a fire, which of the following is the peril? A) the insurer B) the fire

C) the insured D) the house - Correct Answer ✅B According to the law of large numbers, which of the following is TRUE? A) the smaller the number of risks combined into one group, the larger the loss will be to an individual B) the larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred C) the larger the number of risks combined into one group, the smaller the loss will be to an individual D) the smaller the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred - Correct Answer ✅B Which of the following represents a pure risk? A) gambling at a casino B) a car accident C) investing money in the stock market D) playing high-stakes poker with friends - Correct Answer ✅B A bulk-mail insurance advertising brochure sent by the insurer to every home in one ZIP code is an example of A) personal advertising

B) direct response marketing C) producer marketing D) agent marketing - Correct Answer ✅B Which of the following levels of agent authority is a written agreement with the insurer? A) express authority B) assumed authority C) implied authority D) apparent authority - Correct Answer ✅A All of the following statements regarding mutual insurers are correct EXCEPT A) mutual insurers pay dividends to policyholders B) mutual insurers have stock and stockholders C) mutual insurers do not guarantee dividends D) mutual insurers are owned by their policyholders - Correct Answer ✅B All of the following are elements of insurable risks EXCEPT A) the risk must be catastrophic for the insurance company B) the premium should be affordable C) the risk must be noncatastrophic D) the premium must be calculable - Correct Answer ✅A

According to the law of agency, the person on whose behalf the insurance agent is called up to act is called A) the principal B) the insured C) the agent D) the underwriter - Correct Answer ✅A Insurance is a contract that A) eliminates all hazards for an individual B) eliminates all risk an individual C) transfers the risk of financial loss from an insurance company to an individual or business D) transfers the risk of financial loss from an individual or business to an insurance company - Correct Answer ✅D