Ohio Health and life insurance exam
Exam Questions and Answers (2024 /
2025) (Verified Answers)
Insurance - CORRECT ANSWER A contract that indemnifies
another against loss, damage, or liability
Indemnify - CORRECT ANSWER To make one whole by
restoring them to the same financial position that existed
before the loss
Pure risk - CORRECT ANSWER There is only a chance of
loss and there is no possibility for gain (insurable)
Speculative risk - CORRECT ANSWER Uncertainty of loss or
gain: these risks are undertaken voluntarily (ex: stock
market)
Peril - CORRECT ANSWER The immediate specific event
causing loss
Moral hazard - CORRECT ANSWER Arise from peoples
habits and values (ex: filing a false claim)
Morale hazard - CORRECT ANSWER Arise from human
carelessness (ex: failing to take safety precautions)
STARR - CORRECT ANSWER Methods for dealing with risk:
Sharing, Transfer, Avoidance, Reduction, Retention
,Insurable interest - CORRECT ANSWER An individual must
have a legitimate interest in the preservation of the life of the
property insured
Subrogation - CORRECT ANSWER A clause in the insurance
policy that gives the insurer the right to sue the party
responsible for the loss (not used in life insurance)
Face amount - CORRECT ANSWER Maximum amount of
liability of the insurer
Elimination period - CORRECT ANSWER The "deductible"
for disability insurance; the number of days a person must
be disabled before benefits become payable
Coinsurance - CORRECT ANSWER The insurer and insured
share allowable expenses
Life insurance - CORRECT ANSWER Insurance coverage on
human lives including endowments and annuities. May also
include benefits for accidental death, dismemberment, or
diability
Variable products - CORRECT ANSWER These carry
investment risk- the insured may lose money because of a
decrease in the price of securities underlying the product.
The SEC and state insurance departments regulate variable
contracts
Credit - CORRECT ANSWER A limited line of insurance
protecting the insured against financial consequences
should a debtor be unable to pay due to illness/ death
,Stock insurance company - CORRECT ANSWER Non-
participating company because its policyholders do not
participate in dividends
Mutual insurers - CORRECT ANSWER Participating
company because ownership rests with the policyholders
who are paid policy dividends of funds not paid out in claims
and operating costs
Reciprocal insurers - CORRECT ANSWER Unincorporated
groups of people that provide insurance for one another
through indemnity agreements. Each individual is known as
a subscriber and accounts are overseen by an attorney-in-
fact
Fraternal benefit societies - CORRECT ANSWER Life
insurance carriers that exist as social organizations. They
have open contracts, which allow for additional, unscheduled
premium charges in times of financial difficulty
Lloyds of London - CORRECT ANSWER A meeting place for
members who transact insurance and are individually liable
for contracts they enter
Reinsurers - CORRECT ANSWER Insurers for insurers. The
company that is transferring the risk is called the ceding
company
Faculative reinsurer - CORRECT ANSWER Negotiate on an
individual risk basis. The reinsurer can accept or reject each
risk
Treaty reinsurer - CORRECT ANSWER Automatic sharing of
risks by the ceding company
, Excess and surplus lines - CORRECT ANSWER Risks that
are difficult to insure in the normal marketplace are
attempted to be places in unauthorized carriers
Risk retention groups - CORRECT ANSWER Spread liability
among its members (only liability insurance)
Self- insurance - CORRECT ANSWER Set aside reserve
funds to cover loss and purchase excess insurance to cover
large losses above a given level
Insurers domicile - CORRECT ANSWER Classification:
domestic, foreign, alien
General agents / MGA's - CORRECT ANSWER Hire, train and
supervise agents within a specific geographic area. They are
compensated with commission they earn as well as an
overriding commission on the business produced by agents
they manage
Direct writing companies - CORRECT ANSWER Pay salaries
to people to sell insurance (usually not paid commission).
The company owns all business produced
Direct response marketing - CORRECT ANSWER TV, mail,
magazines,...
Franchise marketing - CORRECT ANSWER Coverage to
employees of small firms (individualized policies)
Producers - CORRECT ANSWER May function as agents or
brokers. Life and health producers are authorized to solicit,
receive and forward applications for the contracts written by
their companies. They may receive the first premium but may
Exam Questions and Answers (2024 /
2025) (Verified Answers)
Insurance - CORRECT ANSWER A contract that indemnifies
another against loss, damage, or liability
Indemnify - CORRECT ANSWER To make one whole by
restoring them to the same financial position that existed
before the loss
Pure risk - CORRECT ANSWER There is only a chance of
loss and there is no possibility for gain (insurable)
Speculative risk - CORRECT ANSWER Uncertainty of loss or
gain: these risks are undertaken voluntarily (ex: stock
market)
Peril - CORRECT ANSWER The immediate specific event
causing loss
Moral hazard - CORRECT ANSWER Arise from peoples
habits and values (ex: filing a false claim)
Morale hazard - CORRECT ANSWER Arise from human
carelessness (ex: failing to take safety precautions)
STARR - CORRECT ANSWER Methods for dealing with risk:
Sharing, Transfer, Avoidance, Reduction, Retention
,Insurable interest - CORRECT ANSWER An individual must
have a legitimate interest in the preservation of the life of the
property insured
Subrogation - CORRECT ANSWER A clause in the insurance
policy that gives the insurer the right to sue the party
responsible for the loss (not used in life insurance)
Face amount - CORRECT ANSWER Maximum amount of
liability of the insurer
Elimination period - CORRECT ANSWER The "deductible"
for disability insurance; the number of days a person must
be disabled before benefits become payable
Coinsurance - CORRECT ANSWER The insurer and insured
share allowable expenses
Life insurance - CORRECT ANSWER Insurance coverage on
human lives including endowments and annuities. May also
include benefits for accidental death, dismemberment, or
diability
Variable products - CORRECT ANSWER These carry
investment risk- the insured may lose money because of a
decrease in the price of securities underlying the product.
The SEC and state insurance departments regulate variable
contracts
Credit - CORRECT ANSWER A limited line of insurance
protecting the insured against financial consequences
should a debtor be unable to pay due to illness/ death
,Stock insurance company - CORRECT ANSWER Non-
participating company because its policyholders do not
participate in dividends
Mutual insurers - CORRECT ANSWER Participating
company because ownership rests with the policyholders
who are paid policy dividends of funds not paid out in claims
and operating costs
Reciprocal insurers - CORRECT ANSWER Unincorporated
groups of people that provide insurance for one another
through indemnity agreements. Each individual is known as
a subscriber and accounts are overseen by an attorney-in-
fact
Fraternal benefit societies - CORRECT ANSWER Life
insurance carriers that exist as social organizations. They
have open contracts, which allow for additional, unscheduled
premium charges in times of financial difficulty
Lloyds of London - CORRECT ANSWER A meeting place for
members who transact insurance and are individually liable
for contracts they enter
Reinsurers - CORRECT ANSWER Insurers for insurers. The
company that is transferring the risk is called the ceding
company
Faculative reinsurer - CORRECT ANSWER Negotiate on an
individual risk basis. The reinsurer can accept or reject each
risk
Treaty reinsurer - CORRECT ANSWER Automatic sharing of
risks by the ceding company
, Excess and surplus lines - CORRECT ANSWER Risks that
are difficult to insure in the normal marketplace are
attempted to be places in unauthorized carriers
Risk retention groups - CORRECT ANSWER Spread liability
among its members (only liability insurance)
Self- insurance - CORRECT ANSWER Set aside reserve
funds to cover loss and purchase excess insurance to cover
large losses above a given level
Insurers domicile - CORRECT ANSWER Classification:
domestic, foreign, alien
General agents / MGA's - CORRECT ANSWER Hire, train and
supervise agents within a specific geographic area. They are
compensated with commission they earn as well as an
overriding commission on the business produced by agents
they manage
Direct writing companies - CORRECT ANSWER Pay salaries
to people to sell insurance (usually not paid commission).
The company owns all business produced
Direct response marketing - CORRECT ANSWER TV, mail,
magazines,...
Franchise marketing - CORRECT ANSWER Coverage to
employees of small firms (individualized policies)
Producers - CORRECT ANSWER May function as agents or
brokers. Life and health producers are authorized to solicit,
receive and forward applications for the contracts written by
their companies. They may receive the first premium but may
