PA LIFE INSURANCE COMPREHENSIVE 2026 UPDATED
QUESTIONS AND ANSWERS SCORED A+
✔✔Advertising the availability of insurance is not - ✔✔considered to be an offer.
✔✔A specific and definite proposal to enter into a contract is known as - ✔✔an offer.
✔✔The consideration on a policy need - ✔✔not be equal.
✔✔A policy may not be voided - ✔✔due to unequal consideration.
✔✔Under the consideration clause, - ✔✔something of value must be exchanged.
✔✔Because insurance contracts are contracts of adhesion, - ✔✔policy ambiguities
always favor the insured.
✔✔Insurance policies are considered - ✔✔to be unilateral contracts, in that only one
party makes an enforceable promise the insurer.
✔✔The principle of indemnity states - ✔✔the purpose of insurance is to restore the
insured to the same position as before the loss occurred.
✔✔The principle of utmost good faith states - ✔✔that all parties to an insurance
transaction are honest.
✔✔A representation is defined as - ✔✔the truth to the best of one's knowledge.
✔✔A warranty is defined as - ✔✔a sworn statement of truth, guaranteed to be true.
✔✔A breach of warranty - ✔✔may void a contract.
✔✔Concealment is defined as - ✔✔the failure to disclose a material fact.
✔✔When an insurer voluntarily gives up the right to obtain information that they are
entitled to, - ✔✔they have made a waiver.
✔✔Insurable interest - ✔✔must exist at the time of application, but not necessarily at
the time of a claim.
✔✔Insurable interest may be based on - ✔✔economics or family relationships.
✔✔An insurable interest exists if - ✔✔someone would benefit if another person
continues to live.
, ✔✔Buying a life insurance policy - ✔✔creates an immediate estate.
✔✔When life insurance is used to pay estate taxes - ✔✔it is known as estate
conservation.
✔✔A life settlement contract is between - ✔✔the life insurance policyowner and a third
party.
✔✔The human life value approach was created to - ✔✔establish what a family would
lose in income upon the death of the sole or chief income provider.
✔✔The needs approach to life insurance does not - ✔✔consider future earnings.
✔✔Stockholders in small, privately held closed corporations often enter into -
✔✔buy/sell agreements with the corporation that are funded by life policies.
✔✔A policy that provides for business continuation in the event that a business partner
dies is based upon a - ✔✔cross-purchase buy/sell agreement.
✔✔A corporation may buy a policy on a shareholder to provide for stock redemption in
the event of the - ✔✔shareholder's death.
✔✔A stock redemption plan is an - ✔✔agreement whereby a corporation agrees to buy
back the stock of a deceased shareholder.
✔✔Examples of third-party policyownership include - ✔✔key person and partnership
insurance, as well as a policy written on the life of a spouse or minor child.
✔✔Under an executive bonus, - ✔✔the premium paid to the employee as a bonus is
deductible by the business and the amount paid to or for the employee is reportable as
taxable income to the employee.
✔✔When life insurance is purchased as an executive bonus for a corporate employee, -
✔✔the policy belongs to the employee.
✔✔Life insurance mortality tables are based upon - ✔✔people and time.
✔✔Life insurance premiums are based on - ✔✔mortality (death) plus company
expenses minus interest earned on company investments.
✔✔Agents (producers) are also known as - ✔✔field underwriters.
QUESTIONS AND ANSWERS SCORED A+
✔✔Advertising the availability of insurance is not - ✔✔considered to be an offer.
✔✔A specific and definite proposal to enter into a contract is known as - ✔✔an offer.
✔✔The consideration on a policy need - ✔✔not be equal.
✔✔A policy may not be voided - ✔✔due to unequal consideration.
✔✔Under the consideration clause, - ✔✔something of value must be exchanged.
✔✔Because insurance contracts are contracts of adhesion, - ✔✔policy ambiguities
always favor the insured.
✔✔Insurance policies are considered - ✔✔to be unilateral contracts, in that only one
party makes an enforceable promise the insurer.
✔✔The principle of indemnity states - ✔✔the purpose of insurance is to restore the
insured to the same position as before the loss occurred.
✔✔The principle of utmost good faith states - ✔✔that all parties to an insurance
transaction are honest.
✔✔A representation is defined as - ✔✔the truth to the best of one's knowledge.
✔✔A warranty is defined as - ✔✔a sworn statement of truth, guaranteed to be true.
✔✔A breach of warranty - ✔✔may void a contract.
✔✔Concealment is defined as - ✔✔the failure to disclose a material fact.
✔✔When an insurer voluntarily gives up the right to obtain information that they are
entitled to, - ✔✔they have made a waiver.
✔✔Insurable interest - ✔✔must exist at the time of application, but not necessarily at
the time of a claim.
✔✔Insurable interest may be based on - ✔✔economics or family relationships.
✔✔An insurable interest exists if - ✔✔someone would benefit if another person
continues to live.
, ✔✔Buying a life insurance policy - ✔✔creates an immediate estate.
✔✔When life insurance is used to pay estate taxes - ✔✔it is known as estate
conservation.
✔✔A life settlement contract is between - ✔✔the life insurance policyowner and a third
party.
✔✔The human life value approach was created to - ✔✔establish what a family would
lose in income upon the death of the sole or chief income provider.
✔✔The needs approach to life insurance does not - ✔✔consider future earnings.
✔✔Stockholders in small, privately held closed corporations often enter into -
✔✔buy/sell agreements with the corporation that are funded by life policies.
✔✔A policy that provides for business continuation in the event that a business partner
dies is based upon a - ✔✔cross-purchase buy/sell agreement.
✔✔A corporation may buy a policy on a shareholder to provide for stock redemption in
the event of the - ✔✔shareholder's death.
✔✔A stock redemption plan is an - ✔✔agreement whereby a corporation agrees to buy
back the stock of a deceased shareholder.
✔✔Examples of third-party policyownership include - ✔✔key person and partnership
insurance, as well as a policy written on the life of a spouse or minor child.
✔✔Under an executive bonus, - ✔✔the premium paid to the employee as a bonus is
deductible by the business and the amount paid to or for the employee is reportable as
taxable income to the employee.
✔✔When life insurance is purchased as an executive bonus for a corporate employee, -
✔✔the policy belongs to the employee.
✔✔Life insurance mortality tables are based upon - ✔✔people and time.
✔✔Life insurance premiums are based on - ✔✔mortality (death) plus company
expenses minus interest earned on company investments.
✔✔Agents (producers) are also known as - ✔✔field underwriters.
