LIFE INSURANCE LICENSING FINAL
REVIEW SCRIPT 2026 TESTED ANSWERS
GRADED A+
● What is speculative Risk? Answer: There is a chance for gain or loss
● What is the definition of a peril? Answer: Perils are the causes of loss
in the insurance contract
● What is adverse selection? Answer: Bad risk. These are situations that
will cause an immediate claim for insurers. Insurers underwrite to avoid
adverse selection to avoid immediate loss.
● What are the 5 methods of handling risks? Answer: Sharing - A
reciprocal insurance exchange where no insurer is involved Transferring
- The most effective way to handle risk is to transfer it so that the loss is
borne by another party insurance being the most common method of
transferring risk Avoidance - Eliminate exposure to a loss Reduction -
Lessen the severity of a loss Retention - Deductibles / Co-Pays / Self-
Insurance - The planned assumption of risk by the insured and/or policy
owner.
● What is considered in determining the amount of personal insurance
using the human life value approach? Answer: Age Medical history
Occupation Sex
, ● Define the Aleatory contract Answer: Law of Aleatory states that
unequal consideration is exchanged between the parties (premium - vs -
benefits)
● What is a domestic insurer? Answer: An insurance company that is
incorporated in this state
● What is a foreign insurer? Answer: Insurer is incorporated in a U.S.
territory/possession
● What is an alien insurer? Answer: An insurer "incorporated" outside
the USA
● Who owns stock companies? Answer: Stockholders
● What is it called when an insurance agent acts with authority not
expressed in writing? Answer: Implied authority
● When does an insurance agent provide the client with a conditional
receipt? Answer: Agent collects first premium payment along with
completed application and leaves the conditional receipt signed by agent
REVIEW SCRIPT 2026 TESTED ANSWERS
GRADED A+
● What is speculative Risk? Answer: There is a chance for gain or loss
● What is the definition of a peril? Answer: Perils are the causes of loss
in the insurance contract
● What is adverse selection? Answer: Bad risk. These are situations that
will cause an immediate claim for insurers. Insurers underwrite to avoid
adverse selection to avoid immediate loss.
● What are the 5 methods of handling risks? Answer: Sharing - A
reciprocal insurance exchange where no insurer is involved Transferring
- The most effective way to handle risk is to transfer it so that the loss is
borne by another party insurance being the most common method of
transferring risk Avoidance - Eliminate exposure to a loss Reduction -
Lessen the severity of a loss Retention - Deductibles / Co-Pays / Self-
Insurance - The planned assumption of risk by the insured and/or policy
owner.
● What is considered in determining the amount of personal insurance
using the human life value approach? Answer: Age Medical history
Occupation Sex
, ● Define the Aleatory contract Answer: Law of Aleatory states that
unequal consideration is exchanged between the parties (premium - vs -
benefits)
● What is a domestic insurer? Answer: An insurance company that is
incorporated in this state
● What is a foreign insurer? Answer: Insurer is incorporated in a U.S.
territory/possession
● What is an alien insurer? Answer: An insurer "incorporated" outside
the USA
● Who owns stock companies? Answer: Stockholders
● What is it called when an insurance agent acts with authority not
expressed in writing? Answer: Implied authority
● When does an insurance agent provide the client with a conditional
receipt? Answer: Agent collects first premium payment along with
completed application and leaves the conditional receipt signed by agent
