NEBRASKA LIFE AND HEALTH
INSURANCE EXAM QUESTIONS &
VERIFIED ANSWERS PASSED 100%
What is Insurance? - CORRECT ANSWER a contract in which 1 party (insurance
company) agrees to indemnify (make whole) the insured party against loss, damage, or
a liability arising from an unknown event.
What is life insurance? - CORRECT ANSWER a policy that protects survivors from
losses suffered after an insured's death
What does insurance do? - CORRECT ANSWER transfers the risk of loss from an
individual or business entity to an insurance company which spreads out costs of
unexpected losses to many individuals
What is risk? - CORRECT ANSWER uncertainty or chance of a loss occurring
Pure risk - CORRECT ANSWER refers to sutuations that can only result in a loss or no
change, no opportunity for financial gain
What type of risk do insurance companies accept? - CORRECT ANSWER pure risk
Speculative risk - CORRECT ANSWER involves opportunity for loss or gain
Hazard - CORRECT ANSWER conditions or situation that increase probability of an
insured loss occurring
Physical hazard - CORRECT ANSWER individual characteristics that increase the
chances of the cause of loss
Example of a physical hazard - CORRECT ANSWER past medical history, existing
conditions, (blindness)
Moral hazard - CORRECT ANSWER tendencise towards increased risk. moral hazards
inclove evaluating character of insured
example of moral hazard - CORRECT ANSWER applicants who may lie on an
application for insurance or in the past have submitted fraudulent claims against an
insurer
, Morale hazard - CORRECT ANSWER similar to moral hazards, except that they arise
from a state of mind that causes indifference to loss, such as carelessness
example of morale hazard - CORRECT ANSWER actions taken without forethought
may cause physical injuries
Peril - CORRECT ANSWER perils are causes of loss insured against in an insurance
policy
Life Insurance - CORRECT ANSWER insures against the financial loss caused by the
premature death of the insured
Health Insurance - CORRECT ANSWER insures against mediacal expenses and/or
loss of income caused by the insured's sickness or accidental injury
Property Insurance - CORRECT ANSWER insures against the loss and/or damage of
property and resulting in liabilities
Loss - CORRECT ANSWER reduction, decrease or dissappearance of value of the
person or property insured in a policy, caused by a named peril. Insurance provides
means to transfer loss
Exposure - CORRECT ANSWER is a unity of measure used to determine rates
charged for insurance companies
What are factors considered in determining rates for life insurance? - CORRECT
ANSWER age of insured, medical history, occupation, sex
Homogeneous - CORRECT ANSWER large # of units having the same or similar
exposure to loss
Avoidance (method of handling risk) - CORRECT ANSWER eliminating exposure to a
loss
Example of avoidance - CORRECT ANSWER avoid being killed in an airplane crash by
not riding on airplanes (not practical)
Retention (method of handling risk) - CORRECT ANSWER is planned assumption of
risk by insured through use of deductibles, co-payments, or self-insurance
What is the purpose of retention? - CORRECT ANSWER 1. to reduce expenses,
increase cash flow
2. to increase control of claim reserving and claims settlements
3. to fund losses that cannon be insured
INSURANCE EXAM QUESTIONS &
VERIFIED ANSWERS PASSED 100%
What is Insurance? - CORRECT ANSWER a contract in which 1 party (insurance
company) agrees to indemnify (make whole) the insured party against loss, damage, or
a liability arising from an unknown event.
What is life insurance? - CORRECT ANSWER a policy that protects survivors from
losses suffered after an insured's death
What does insurance do? - CORRECT ANSWER transfers the risk of loss from an
individual or business entity to an insurance company which spreads out costs of
unexpected losses to many individuals
What is risk? - CORRECT ANSWER uncertainty or chance of a loss occurring
Pure risk - CORRECT ANSWER refers to sutuations that can only result in a loss or no
change, no opportunity for financial gain
What type of risk do insurance companies accept? - CORRECT ANSWER pure risk
Speculative risk - CORRECT ANSWER involves opportunity for loss or gain
Hazard - CORRECT ANSWER conditions or situation that increase probability of an
insured loss occurring
Physical hazard - CORRECT ANSWER individual characteristics that increase the
chances of the cause of loss
Example of a physical hazard - CORRECT ANSWER past medical history, existing
conditions, (blindness)
Moral hazard - CORRECT ANSWER tendencise towards increased risk. moral hazards
inclove evaluating character of insured
example of moral hazard - CORRECT ANSWER applicants who may lie on an
application for insurance or in the past have submitted fraudulent claims against an
insurer
, Morale hazard - CORRECT ANSWER similar to moral hazards, except that they arise
from a state of mind that causes indifference to loss, such as carelessness
example of morale hazard - CORRECT ANSWER actions taken without forethought
may cause physical injuries
Peril - CORRECT ANSWER perils are causes of loss insured against in an insurance
policy
Life Insurance - CORRECT ANSWER insures against the financial loss caused by the
premature death of the insured
Health Insurance - CORRECT ANSWER insures against mediacal expenses and/or
loss of income caused by the insured's sickness or accidental injury
Property Insurance - CORRECT ANSWER insures against the loss and/or damage of
property and resulting in liabilities
Loss - CORRECT ANSWER reduction, decrease or dissappearance of value of the
person or property insured in a policy, caused by a named peril. Insurance provides
means to transfer loss
Exposure - CORRECT ANSWER is a unity of measure used to determine rates
charged for insurance companies
What are factors considered in determining rates for life insurance? - CORRECT
ANSWER age of insured, medical history, occupation, sex
Homogeneous - CORRECT ANSWER large # of units having the same or similar
exposure to loss
Avoidance (method of handling risk) - CORRECT ANSWER eliminating exposure to a
loss
Example of avoidance - CORRECT ANSWER avoid being killed in an airplane crash by
not riding on airplanes (not practical)
Retention (method of handling risk) - CORRECT ANSWER is planned assumption of
risk by insured through use of deductibles, co-payments, or self-insurance
What is the purpose of retention? - CORRECT ANSWER 1. to reduce expenses,
increase cash flow
2. to increase control of claim reserving and claims settlements
3. to fund losses that cannon be insured
