Comprehensive NC Life & Health
Insurance Licensing Study Guide
Questions and Answers 100%
PASS
What is the primary role of a risk manager?—ANSWER---To help others identify and account
for risks to which they are exposed.
What are the two types of risk?—ANSWER---Speculative risk and pure risk.
What is speculative risk?—ANSWER---A risk that has the possibility of both gain and loss,
such as investing in stocks or buying a lottery ticket.
What is pure risk?—ANSWER---A risk that only involves the possibility of loss, which
insurance companies are designed to cover.
How is loss defined in the context of risk management?—ANSWER---A reduction in the value
of an asset.
Give an example of a loss related to a home.—ANSWER---Damage from an ice storm causing
a tree branch to fall through the roof.
What is a common misconception about insuring assets?—ANSWER---Many people insure
physical assets but do not insure their ability to earn income.
, What is the acronym used to remember risk management techniques?—ANSWER---STARR.
What does 'S' in STARR stand for?—ANSWER---Sharing.
What does 'T' in STARR stand for?—ANSWER---Transferring.
What does 'A' in STARR stand for?—ANSWER---Avoiding.
What does 'R' in STARR stand for?—ANSWER---Retaining.
What does the second 'R' in STARR stand for?—ANSWER---Reducing.
How does sharing risk work?—ANSWER---Individuals seek out others to share the burden of
risk, such as sharing business startup costs.
How is risk transferred?—ANSWER---By purchasing insurance, the risk of loss is transferred
from the individual to the insurance company.
What is an example of risk avoidance?—ANSWER---Choosing not to engage in sky diving to
avoid the risk of injury.
What does retaining risk mean?—ANSWER---Accepting the risk and its potential
consequences, often through deductibles in insurance.
How can risk be reduced?—ANSWER---By taking precautions, such as parking far away to
avoid potential damage to a new car.
What is an example of retaining risk unconsciously?—ANSWER---Not being aware of the
costs of long-term care and thus not planning for it.
What is the significance of disability in risk management?—ANSWER---Disability is more
likely than death, making it crucial to insure the ability to earn income.
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
Insurance Licensing Study Guide
Questions and Answers 100%
PASS
What is the primary role of a risk manager?—ANSWER---To help others identify and account
for risks to which they are exposed.
What are the two types of risk?—ANSWER---Speculative risk and pure risk.
What is speculative risk?—ANSWER---A risk that has the possibility of both gain and loss,
such as investing in stocks or buying a lottery ticket.
What is pure risk?—ANSWER---A risk that only involves the possibility of loss, which
insurance companies are designed to cover.
How is loss defined in the context of risk management?—ANSWER---A reduction in the value
of an asset.
Give an example of a loss related to a home.—ANSWER---Damage from an ice storm causing
a tree branch to fall through the roof.
What is a common misconception about insuring assets?—ANSWER---Many people insure
physical assets but do not insure their ability to earn income.
, What is the acronym used to remember risk management techniques?—ANSWER---STARR.
What does 'S' in STARR stand for?—ANSWER---Sharing.
What does 'T' in STARR stand for?—ANSWER---Transferring.
What does 'A' in STARR stand for?—ANSWER---Avoiding.
What does 'R' in STARR stand for?—ANSWER---Retaining.
What does the second 'R' in STARR stand for?—ANSWER---Reducing.
How does sharing risk work?—ANSWER---Individuals seek out others to share the burden of
risk, such as sharing business startup costs.
How is risk transferred?—ANSWER---By purchasing insurance, the risk of loss is transferred
from the individual to the insurance company.
What is an example of risk avoidance?—ANSWER---Choosing not to engage in sky diving to
avoid the risk of injury.
What does retaining risk mean?—ANSWER---Accepting the risk and its potential
consequences, often through deductibles in insurance.
How can risk be reduced?—ANSWER---By taking precautions, such as parking far away to
avoid potential damage to a new car.
What is an example of retaining risk unconsciously?—ANSWER---Not being aware of the
costs of long-term care and thus not planning for it.
What is the significance of disability in risk management?—ANSWER---Disability is more
likely than death, making it crucial to insure the ability to earn income.
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
