Insurance Licensing Exam Questions
and Answers | Latest Version |
2025/2026 | Correct & Verified
What is the primary purpose of insurance?
✔✔To transfer risk from an individual to an insurer
What is a policyholder?
✔✔The person who owns the insurance policy
What does the term premium mean?
✔✔The amount paid for insurance coverage
What is risk in insurance terms?
✔✔The chance of loss occurring
What is an insurable interest?
✔✔A financial or emotional stake in the insured item or person
Why is insurable interest required?
✔✔To prevent gambling on losses
What is indemnity?
1
,✔✔Restoring the insured to the financial position before loss
What is a deductible?
✔✔The amount the insured pays before insurance pays
What is a claim?
✔✔A request for payment after a loss
What is underwriting?
✔✔The process of evaluating risk
What is a peril?
✔✔A cause of loss
What is a hazard?
✔✔A condition that increases the chance of loss
What is moral hazard?
✔✔Risk arising from dishonesty or character
What is physical hazard?
✔✔Risk from physical conditions
2
,What is morale hazard?
✔✔Risk from carelessness or indifference
What is an insurance contract?
✔✔A legally binding agreement
What does utmost good faith require?
✔✔Honest disclosure by both parties
What is misrepresentation?
✔✔Providing false or incomplete information
What is concealment?
✔✔Failing to disclose important facts
What is fraud in insurance?
✔✔Intentional deception for financial gain
What is a policy limit?
✔✔The maximum amount an insurer will pay
3
, What is reinsurance?
✔✔Insurance purchased by insurers
What is a loss?
✔✔Damage or harm covered by insurance
What is subrogation?
✔✔The insurer’s right to recover from a third party
What does cancellation mean?
✔✔Ending a policy before expiration
What is nonrenewal?
✔✔Refusal to continue coverage after expiry
What is lapse in insurance?
✔✔Termination due to nonpayment
What is a grace period?
✔✔Extra time allowed to pay premiums
What is a beneficiary?
4
and Answers | Latest Version |
2025/2026 | Correct & Verified
What is the primary purpose of insurance?
✔✔To transfer risk from an individual to an insurer
What is a policyholder?
✔✔The person who owns the insurance policy
What does the term premium mean?
✔✔The amount paid for insurance coverage
What is risk in insurance terms?
✔✔The chance of loss occurring
What is an insurable interest?
✔✔A financial or emotional stake in the insured item or person
Why is insurable interest required?
✔✔To prevent gambling on losses
What is indemnity?
1
,✔✔Restoring the insured to the financial position before loss
What is a deductible?
✔✔The amount the insured pays before insurance pays
What is a claim?
✔✔A request for payment after a loss
What is underwriting?
✔✔The process of evaluating risk
What is a peril?
✔✔A cause of loss
What is a hazard?
✔✔A condition that increases the chance of loss
What is moral hazard?
✔✔Risk arising from dishonesty or character
What is physical hazard?
✔✔Risk from physical conditions
2
,What is morale hazard?
✔✔Risk from carelessness or indifference
What is an insurance contract?
✔✔A legally binding agreement
What does utmost good faith require?
✔✔Honest disclosure by both parties
What is misrepresentation?
✔✔Providing false or incomplete information
What is concealment?
✔✔Failing to disclose important facts
What is fraud in insurance?
✔✔Intentional deception for financial gain
What is a policy limit?
✔✔The maximum amount an insurer will pay
3
, What is reinsurance?
✔✔Insurance purchased by insurers
What is a loss?
✔✔Damage or harm covered by insurance
What is subrogation?
✔✔The insurer’s right to recover from a third party
What does cancellation mean?
✔✔Ending a policy before expiration
What is nonrenewal?
✔✔Refusal to continue coverage after expiry
What is lapse in insurance?
✔✔Termination due to nonpayment
What is a grace period?
✔✔Extra time allowed to pay premiums
What is a beneficiary?
4
