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MASS STATE LIFE INSURANCE EXAM
2026 QUESTIONS AND ANSWERS | A+
GRADED | WITH EXPERT SOLUTIONS
Which of the following describes a participating life insurance
policy? - correct answer-A participating life policy is one in which
the policyowner receives dividends deriving from the company's
divisible surplus
What type of reinsurance contract between two insurers involves
an automatic sharing of the risks assumed? - correct answer-
Under treaty reinsurance, each party automatically accepts
specific percentages of the insurer's business.
At what point must a life insurance applicant be informed of their
rights that fall under the Fair Credit Reporting Act? - correct
answer-Upon completion of the application
The State Guaranty Association guarantees - correct answer-that
a claim will be paid if an admitted insurer becomes insolvent
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Dividends from a mutual insurance company are paid to whom? -
correct answer-Policyholders
What is considered the accounting measurement of an insurance
company's future obligations to its policyowners? - correct
answer-reserves
A group-owned insurance company that is formed to assume and
spread the liability risks of its members is known as a - correct
answer-risk retention group
Which of the following is a syndicate established by a group of
insurers to share underwriting duties? - correct answer-Lloyd's
organization
An agent's authority to bind an insurer to an insurance contract
may be granted in the - correct answer-agent's contract and the
insurance company's appointment
Dividends from a stock insurance company are normally sent to -
correct answer-shareholders
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Law of Large numbers - correct answer--insurance is based on
the sharing of risks among a large group of people
-states that the larger the number of people, the more predictable
the actual losses will be
-companies use this data to calculate rates
Speculative risk - correct answer--involves opportunity for either
loss or gain
-not covered by insurance companies
pure risk - correct answer--a situation that can only result in a
loss, there is no opportunity for financial gain
-only type of risk that is insurable
treatment of risk through: avoidance - correct answer-simply
avoiding as many risks as possible
-effective but not always practical
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treatment of risk through- reduction - correct answer-since we
cannot avoid risk entirely we often attempt to lessen the possibility
of a loss by taking acting to reduce the risk
-
treatment of risk through- sharing - correct answer-when a group
of individuals or businesses with similar exposures share the
losses that occur within that group
-reciprocal insurance exchange is a formal risk sharing
arrangement
treatment of risk through- retention - correct answer-also known
as self-insurance: when individuals have the financial ability to
fund losses by themselves when they occur
treatment of risk through- transfer - correct answer-the most
effective way to handle risk
- risk is transferred to another party - insurance is the most
common method of transferring risk from an individual or group to
an insurance company
MASS STATE LIFE INSURANCE EXAM
2026 QUESTIONS AND ANSWERS | A+
GRADED | WITH EXPERT SOLUTIONS
Which of the following describes a participating life insurance
policy? - correct answer-A participating life policy is one in which
the policyowner receives dividends deriving from the company's
divisible surplus
What type of reinsurance contract between two insurers involves
an automatic sharing of the risks assumed? - correct answer-
Under treaty reinsurance, each party automatically accepts
specific percentages of the insurer's business.
At what point must a life insurance applicant be informed of their
rights that fall under the Fair Credit Reporting Act? - correct
answer-Upon completion of the application
The State Guaranty Association guarantees - correct answer-that
a claim will be paid if an admitted insurer becomes insolvent
, Page | 2
Dividends from a mutual insurance company are paid to whom? -
correct answer-Policyholders
What is considered the accounting measurement of an insurance
company's future obligations to its policyowners? - correct
answer-reserves
A group-owned insurance company that is formed to assume and
spread the liability risks of its members is known as a - correct
answer-risk retention group
Which of the following is a syndicate established by a group of
insurers to share underwriting duties? - correct answer-Lloyd's
organization
An agent's authority to bind an insurer to an insurance contract
may be granted in the - correct answer-agent's contract and the
insurance company's appointment
Dividends from a stock insurance company are normally sent to -
correct answer-shareholders
, Page | 3
Law of Large numbers - correct answer--insurance is based on
the sharing of risks among a large group of people
-states that the larger the number of people, the more predictable
the actual losses will be
-companies use this data to calculate rates
Speculative risk - correct answer--involves opportunity for either
loss or gain
-not covered by insurance companies
pure risk - correct answer--a situation that can only result in a
loss, there is no opportunity for financial gain
-only type of risk that is insurable
treatment of risk through: avoidance - correct answer-simply
avoiding as many risks as possible
-effective but not always practical
, Page | 4
treatment of risk through- reduction - correct answer-since we
cannot avoid risk entirely we often attempt to lessen the possibility
of a loss by taking acting to reduce the risk
-
treatment of risk through- sharing - correct answer-when a group
of individuals or businesses with similar exposures share the
losses that occur within that group
-reciprocal insurance exchange is a formal risk sharing
arrangement
treatment of risk through- retention - correct answer-also known
as self-insurance: when individuals have the financial ability to
fund losses by themselves when they occur
treatment of risk through- transfer - correct answer-the most
effective way to handle risk
- risk is transferred to another party - insurance is the most
common method of transferring risk from an individual or group to
an insurance company
