PA LIFE INSURANCE 2026 TEST PAPER QUESTIONS AND
ANSWERS SCORED A+
✔✔Lloyds of London - ✔✔insurance market
✔✔All the following are characteristics of a mutual insurance company EXCEPT:
they are owned by stockholders.
they may issue dividends.
they are governed by a board of directors.
they have minimum capital requirements that must be met before they can conduct
business. - ✔✔they are owned by stockholders.
✔✔Lisa is a producer for an insurance company that sells its products to the general
public and which specializes in life insurance policies designed for burial and last
expense purposes, generally with face amounts of $10,000 or less, for which she
oftentimes collects premiums weekly. Lisa most likely represents a(n) - ✔✔home
service insurance company
✔✔Insurance companies generally use one or both of two types of sales
representatives to sell their insurance products, including - ✔✔agents employed by an
insurance company to sell only that company's products; and
independent insurance brokers who sell insurance products for a number of different
companies.
✔✔brokers - ✔✔a representative of the applicant rather than the insurer
✔✔producer - ✔✔agents and brokers
✔✔common law - ✔✔the unwritten law based on the customs, ideas and judicial
decisions that exsisted in England at the time of the American revolution and became
the basis of the American legal system.
✔✔principal - ✔✔the party on whose behalf the agents act
✔✔brokers legally establish ??? with every insurance company with which they write
business. - ✔✔an agent relationship
✔✔career or captive agency system - ✔✔the agent is employed by one insurance
company.
, Insurers that support the career agency system are sometimes called captive agency
companies. The agent works at a branch of the company, under the supervision of a
general agent or agency manager. The agent is generally compensated through a
commission that is based on the size of the sale.
✔✔independent insurance brokers - ✔✔represent multiple insurers; they can pick
insurance products from any of these companies to best meet their clients' needs.
Independent agents work for themselves or for other producers, in their own work
space. They, too, receive a commission for each sale they make.
✔✔Whether career or independent, all producers operate under a ????? with the
insurer/principal while selling its products; This means they are responsible for meeting
standard guidelines set by the insurer. - ✔✔contractual agreement
✔✔fiduciary - ✔✔a person holding funds or valuable property for the benefit of another
person. A fiduciary is generally held to a higher standard of care with respect to the held
property.
✔✔In its fiduciary responsibility to its principal, a producer is required to: - ✔✔solicit
business that is acceptable to the insurer (this duty places a burden of care on agents
not to present unsuitable applicants to insurers);
carry out authorized activities with reasonable care (for this reason, an agent must not
engage in professional activities in which he or she cannot perform at a skill level
possessed by others who are similarly engaged);
fully disclose to the insurer all pertinent information that affects the placement of an
insurance policy, including the proposed insured's current health and health history;
make full disclosure in the completion of claim forms;
avoid conflicts of interest;
follow through on business transactions within a reasonable time; and
fully account for premiums and submit them to the insurer on a timely basis (an agent
must not mix (commingle) premiums with personal funds or use them for personal
expenses).
✔✔There are three levels of producer authority (traditionally called agents' authority): -
✔✔express authority
implied authority
apparent authority
ANSWERS SCORED A+
✔✔Lloyds of London - ✔✔insurance market
✔✔All the following are characteristics of a mutual insurance company EXCEPT:
they are owned by stockholders.
they may issue dividends.
they are governed by a board of directors.
they have minimum capital requirements that must be met before they can conduct
business. - ✔✔they are owned by stockholders.
✔✔Lisa is a producer for an insurance company that sells its products to the general
public and which specializes in life insurance policies designed for burial and last
expense purposes, generally with face amounts of $10,000 or less, for which she
oftentimes collects premiums weekly. Lisa most likely represents a(n) - ✔✔home
service insurance company
✔✔Insurance companies generally use one or both of two types of sales
representatives to sell their insurance products, including - ✔✔agents employed by an
insurance company to sell only that company's products; and
independent insurance brokers who sell insurance products for a number of different
companies.
✔✔brokers - ✔✔a representative of the applicant rather than the insurer
✔✔producer - ✔✔agents and brokers
✔✔common law - ✔✔the unwritten law based on the customs, ideas and judicial
decisions that exsisted in England at the time of the American revolution and became
the basis of the American legal system.
✔✔principal - ✔✔the party on whose behalf the agents act
✔✔brokers legally establish ??? with every insurance company with which they write
business. - ✔✔an agent relationship
✔✔career or captive agency system - ✔✔the agent is employed by one insurance
company.
, Insurers that support the career agency system are sometimes called captive agency
companies. The agent works at a branch of the company, under the supervision of a
general agent or agency manager. The agent is generally compensated through a
commission that is based on the size of the sale.
✔✔independent insurance brokers - ✔✔represent multiple insurers; they can pick
insurance products from any of these companies to best meet their clients' needs.
Independent agents work for themselves or for other producers, in their own work
space. They, too, receive a commission for each sale they make.
✔✔Whether career or independent, all producers operate under a ????? with the
insurer/principal while selling its products; This means they are responsible for meeting
standard guidelines set by the insurer. - ✔✔contractual agreement
✔✔fiduciary - ✔✔a person holding funds or valuable property for the benefit of another
person. A fiduciary is generally held to a higher standard of care with respect to the held
property.
✔✔In its fiduciary responsibility to its principal, a producer is required to: - ✔✔solicit
business that is acceptable to the insurer (this duty places a burden of care on agents
not to present unsuitable applicants to insurers);
carry out authorized activities with reasonable care (for this reason, an agent must not
engage in professional activities in which he or she cannot perform at a skill level
possessed by others who are similarly engaged);
fully disclose to the insurer all pertinent information that affects the placement of an
insurance policy, including the proposed insured's current health and health history;
make full disclosure in the completion of claim forms;
avoid conflicts of interest;
follow through on business transactions within a reasonable time; and
fully account for premiums and submit them to the insurer on a timely basis (an agent
must not mix (commingle) premiums with personal funds or use them for personal
expenses).
✔✔There are three levels of producer authority (traditionally called agents' authority): -
✔✔express authority
implied authority
apparent authority
