Life Insurance – NC Exam
Questions and Answers 100%
PASS
Insurance—ANSWER--Transfer of risk; spreading risk of possible loss over a large number of
people.
Law of Large Number—ANSWER--The greater the number of exposures, the more accurate
the prediction.
Insurable Risk Criteria—ANSWER--(1) Low probability of loss occurring
(2) Less than catastrophic results
(3) Measurable loss
(4) Financially significant loss
(5) Loss must be accidental and unintended
Probability and the law of large numbers helps predict claims by...—ANSWER--looking at
past loss experience of a large number of similar "units" over time.
Accurate prediction of loss payments is necessary to establish the...—ANSWER--rates
(cost/unit) that are to be changed for coverage.
, Adverse Selection—ANSWER--High risk people tend to apply for insurance; concept removes
randomness from probability and increases claims potentially paid out by insurer.
With which type of risk does insurance assist?—ANSWER--Pure risk
Underwriting is the _____ _____ of the insurer.—ANSWER--quality control
Underwriting—ANSWER--Underwriter uses a specific set of criteria to select insurable
applicants and guard against adverse selection.
Underwriting decisions are determined by...—ANSWER--reviewing the applicant's answers
to medical statements and demographics on the initial application.
Representations—ANSWER--Statements made by the applicant on the insurance application
that are believed to be true, but are not guaranteed to be true.
Loss Ratios—ANSWER--Dividing losses (claims) of insurer by premiums collected.
_____ _____ and _____ _____ determine if an insurer has an underwriting profit or loss.—
ANSWER--Loss ratios and expense ratios
Rate Factors—ANSWER--Gender
Age
Health Status
Occupation
Avocations/Hobbies
Family Health History
Type of Insurance
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
Questions and Answers 100%
PASS
Insurance—ANSWER--Transfer of risk; spreading risk of possible loss over a large number of
people.
Law of Large Number—ANSWER--The greater the number of exposures, the more accurate
the prediction.
Insurable Risk Criteria—ANSWER--(1) Low probability of loss occurring
(2) Less than catastrophic results
(3) Measurable loss
(4) Financially significant loss
(5) Loss must be accidental and unintended
Probability and the law of large numbers helps predict claims by...—ANSWER--looking at
past loss experience of a large number of similar "units" over time.
Accurate prediction of loss payments is necessary to establish the...—ANSWER--rates
(cost/unit) that are to be changed for coverage.
, Adverse Selection—ANSWER--High risk people tend to apply for insurance; concept removes
randomness from probability and increases claims potentially paid out by insurer.
With which type of risk does insurance assist?—ANSWER--Pure risk
Underwriting is the _____ _____ of the insurer.—ANSWER--quality control
Underwriting—ANSWER--Underwriter uses a specific set of criteria to select insurable
applicants and guard against adverse selection.
Underwriting decisions are determined by...—ANSWER--reviewing the applicant's answers
to medical statements and demographics on the initial application.
Representations—ANSWER--Statements made by the applicant on the insurance application
that are believed to be true, but are not guaranteed to be true.
Loss Ratios—ANSWER--Dividing losses (claims) of insurer by premiums collected.
_____ _____ and _____ _____ determine if an insurer has an underwriting profit or loss.—
ANSWER--Loss ratios and expense ratios
Rate Factors—ANSWER--Gender
Age
Health Status
Occupation
Avocations/Hobbies
Family Health History
Type of Insurance
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
