ALAHI - Arizona Life Accident and Health Insurance Exam

Question 21: A student asks what each party contributes of value in an insurance contract, since the two contributions look nothing alike and are made at very different times. Which of the following correctly identifies the consideration supplied by each party?

Premium from insured, promises from insurer

The application from the insured only

Underwriting approval from the insurer only

Premium from both parties

Question 22: A sixteen year old wants to purchase a life insurance policy on their own life, and the producer explains that one of the basic requirements for a valid contract may not be satisfied. Which of the following elements is in question here?

Legal purpose

Offer and acceptance

Competent parties

Consideration

Question 23: An insured points out that the policy was drafted entirely by the insurer and offered on a take it or leave it basis, with no opportunity to negotiate individual terms. Which of the following characteristics of insurance contracts is being described?

Adhesion

Conditional

Unilateral

Aleatory

Question 24: A policyowner pays a modest annual premium for several years, then dies, and the insurer pays a death benefit many times larger than everything collected. Which of the following characteristics of an insurance contract does this outcome illustrate?

Indemnity

Aleatory

Personal contract

Adhesion

Question 25: An instructor observes that an insurer can be sued for failing to pay a valid claim, but a policyowner who simply stops paying premium cannot be sued for breach. Which of the following characteristics does this asymmetry illustrate?

The contract requires utmost good faith

The contract is conditional

The contract is unilateral

The contract is aleatory

Question 26: A beneficiary learns that the insurer will pay the death claim only after receiving a certified death certificate and a completed claim form, since the policy makes payment depend on those steps. Which of the following characteristics does this requirement illustrate?

Unilateral

Aleatory

Adhesion

Conditional

Question 27: A property owner sells a building and assumes the existing insurance policy simply follows the new owner, but the insurer explains that its agreement was with the seller specifically. Which of the following characteristics of an insurance contract explains this outcome?

It is an aleatory contract

It is a unilateral contract

It is a personal contract

It is a contract of adhesion

Question 28: An insurer signs an agency agreement that specifically grants a producer the power to solicit applications and collect initial premiums on the company's behalf. Which of the following types of authority does that written grant create for the producer?

Express authority

Implied authority

Ostensible authority

Apparent authority

Question 29: A producer's agency agreement says nothing about advertising, yet the producer places an ordinary newspaper notice describing the insurer's products because doing so is customary and necessary to solicit business. Which of the following types of authority supports this act?

Express authority

No authority whatsoever

Apparent authority

Implied authority

Question 30: An insurer allows a former producer to keep using company stationery and signage after the agency contract ended, and a customer reasonably believes that producer still represents the company. Which of the following types of authority may bind the insurer here?

Implied authority

Apparent authority

Fiduciary authority

Express authority

Question 31: A producer completes an application incorrectly and the insurer later argues it never received accurate information, while the applicant insists the producer was told everything. Which of the following principles determines whose knowledge the insurer is charged with?

Knowledge transfers only on insurer confirmation

The applicant bears all responsibility for errors

The producer's knowledge is the insurer's knowledge

Knowledge never transfers between the parties

Question 32: A property insurer explains that its payment is designed to restore the insured to roughly the financial position occupied before the loss, and no better. Which of the following principles is the insurer applying to this claim settlement?

Indemnity

Subrogation

Utmost good faith

Reasonable expectations

Question 33: An instructor explains that both the applicant and the insurer must deal with each other honestly and disclose all material facts, because neither can verify everything the other knows. Which of the following principles does this mutual duty describe?

Indemnity

Estoppel

Adhesion

Utmost good faith

Question 34: An applicant states on a life application that no physician has been consulted in the past two years, believing this to be accurate based on memory. Which of the following terms describes a statement made by an applicant in this manner?

A warranty

A representation

A concealment

A waiver

Question 35: An applicant conceals a recent cancer diagnosis on a life application, and the insurer establishes that it would have declined the application entirely had the truth been disclosed. Which of the following terms describes a false statement of that significance?

An immaterial misstatement

A warranty of good health

A material misrepresentation

An adverse selection

Question 36: An applicant knows about a serious heart condition, is never asked about it directly on the application form, and deliberately says nothing because disclosure would cause the insurer to charge a higher premium. Which of the following terms describes this applicant's silence?

Concealment

Warranty

Waiver

Estoppel

Question 37: An applicant knowingly submits false medical information intending that the insurer rely on it, the insurer does rely on it, and the insurer suffers loss as a result. Which of the following terms describes this complete pattern of conduct?

Breach of warranty

Fraud

Innocent misrepresentation

Waiver of underwriting

Question 38: An insurer learns that an insured breached a policy condition, yet continues to accept premium and process claims without objection for many months. Which of the following terms describes the insurer's voluntary relinquishment of its right to object?

Subrogation

Rescission

Concealment

Waiver

Question 39: An insurer led an insured to believe a lapsed policy had been reinstated, the insured relied on that belief and let other coverage go, and the insurer now wants to deny the claim. Which of the following doctrines prevents that denial?

Coinsurance

Subrogation

Estoppel

Indemnity

Question 40: A candidate learns that insurable interest must exist at a specific point in a life insurance transaction, and that the rule differs from the one applied to property coverage. Which of the following states when insurable interest must exist in life insurance?

At the time of loss only

Both at application and at loss

Only when a beneficiary is changed

At the time of application only

ALAHI Arizona Life Accident and Health Insurance Exam - Set 2 - Part 2

Question 21: A student asks what each party contributes of value in an insurance contract, since the two contributions look nothing alike and are made at very different times. Which of the following correctly identifies the consideration supplied by each party?

Question 22: A sixteen year old wants to purchase a life insurance policy on their own life, and the producer explains that one of the basic requirements for a valid contract may not be satisfied. Which of the following elements is in question here?

Question 23: An insured points out that the policy was drafted entirely by the insurer and offered on a take it or leave it basis, with no opportunity to negotiate individual terms. Which of the following characteristics of insurance contracts is being described?

Question 24: A policyowner pays a modest annual premium for several years, then dies, and the insurer pays a death benefit many times larger than everything collected. Which of the following characteristics of an insurance contract does this outcome illustrate?

Question 25: An instructor observes that an insurer can be sued for failing to pay a valid claim, but a policyowner who simply stops paying premium cannot be sued for breach. Which of the following characteristics does this asymmetry illustrate?

Question 26: A beneficiary learns that the insurer will pay the death claim only after receiving a certified death certificate and a completed claim form, since the policy makes payment depend on those steps. Which of the following characteristics does this requirement illustrate?

Question 27: A property owner sells a building and assumes the existing insurance policy simply follows the new owner, but the insurer explains that its agreement was with the seller specifically. Which of the following characteristics of an insurance contract explains this outcome?

Question 28: An insurer signs an agency agreement that specifically grants a producer the power to solicit applications and collect initial premiums on the company's behalf. Which of the following types of authority does that written grant create for the producer?

Question 29: A producer's agency agreement says nothing about advertising, yet the producer places an ordinary newspaper notice describing the insurer's products because doing so is customary and necessary to solicit business. Which of the following types of authority supports this act?

Question 30: An insurer allows a former producer to keep using company stationery and signage after the agency contract ended, and a customer reasonably believes that producer still represents the company. Which of the following types of authority may bind the insurer here?

Question 31: A producer completes an application incorrectly and the insurer later argues it never received accurate information, while the applicant insists the producer was told everything. Which of the following principles determines whose knowledge the insurer is charged with?

Question 32: A property insurer explains that its payment is designed to restore the insured to roughly the financial position occupied before the loss, and no better. Which of the following principles is the insurer applying to this claim settlement?

Question 33: An instructor explains that both the applicant and the insurer must deal with each other honestly and disclose all material facts, because neither can verify everything the other knows. Which of the following principles does this mutual duty describe?

Question 34: An applicant states on a life application that no physician has been consulted in the past two years, believing this to be accurate based on memory. Which of the following terms describes a statement made by an applicant in this manner?

Question 35: An applicant conceals a recent cancer diagnosis on a life application, and the insurer establishes that it would have declined the application entirely had the truth been disclosed. Which of the following terms describes a false statement of that significance?

Question 36: An applicant knows about a serious heart condition, is never asked about it directly on the application form, and deliberately says nothing because disclosure would cause the insurer to charge a higher premium. Which of the following terms describes this applicant's silence?

Question 37: An applicant knowingly submits false medical information intending that the insurer rely on it, the insurer does rely on it, and the insurer suffers loss as a result. Which of the following terms describes this complete pattern of conduct?

Question 38: An insurer learns that an insured breached a policy condition, yet continues to accept premium and process claims without objection for many months. Which of the following terms describes the insurer's voluntary relinquishment of its right to object?

Question 39: An insurer led an insured to believe a lapsed policy had been reinstated, the insured relied on that belief and let other coverage go, and the insurer now wants to deny the claim. Which of the following doctrines prevents that denial?

Question 40: A candidate learns that insurable interest must exist at a specific point in a life insurance transaction, and that the rule differs from the one applied to property coverage. Which of the following states when insurable interest must exist in life insurance?

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