1|Page
ALABAMA INSURANCE TEST EXAM 2025| BRAND
NEW ACTUAL EXAM WITH 100% VERIFIED
QUESTIONS AND CORRECT SOLUTIONS|
GUARANTEED VALUE PACK| ACE YOUR GRADES.
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the:
A) State Guaranty Association
B) Fair Labor Standards Board
C) Fair Credit Reporting Act
D) National Association of Insurance Commissioners - (answers)C) Fair Credit Act
What type of reinsurance contract involves two companies sharing automatically
sharing their risk exposure?
A) Arbitrage
B) Facultative
C) Excess
D) Treaty - (answers)D) Treaty
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act?
,2|Page
A) Before the appointment is scheduled
B) Upon completion of the Application
C) At the policy's delivery
D) When the insurer receives the MIB Report - (answers)B) Upon completion of
the application
Which of the following requires insurers to disclose when an applicant's consumer
or credit history is being investigated?
A) 1970- Fair Credit Reporting Act
B) 1959- Intervention by (SEC) the securities and exchange commission
C) 1999- Financial Services Modernization Act
D) 1945 - McCarron-Ferguson Act - (answers)A) 1970- Fair Credit Reporting Act
Insurance policies issued by companies which allow their policy owners to
participate in the favorable experience of the company through payments of
dividend are known as:
A) Contributory Policies
B) Non-Contributory Policies
C) Participating Policies
D) Non-Participating Policies - (answers)C) participating policies
,3|Page
A group-owned insurance company that is formed to assume and spread the
liability risks of its members is known as a:
A) A treaty insurer
B) Risk Retention Group
C) Risk Assumption Group
D) A captive insurer - (answers)B) Risk Retention Group
Insurance polices issued by companies which are owned by stockholders and do
not pay policy dividends are known as:
A) contributory policies
B) non-contributory policies
C) participating policies
D) Non-participating policies - (answers)D) Non-participating policies
An insurance company that cedes a portion of an insured's coverage to another
insurer is said to be engaged in:
A) transference
B) reinsurance
C) participation
D) mutuality - (answers)B) reinsurance
, 4|Page
All of the following are examples of pure risk EXCEPT:
A) Losing money at a casino
B) Injured while playing football
C) falling at a casino and breaking a hip
D) Jewelry stolen during a home robbery - (answers)A) Losing money at a casino
Buying land with the anticipation of it going up in value is an example of:
A)Speculative risk
B) law of large numbers
C) perilous hazard
D) pure risk - (answers)A) Speculative risk
Which of the following is considered to be an event or condition that increases
the probability of an insured's loss?
A) Risk
B) Hazard
C) Indemnity
D) Peril - (answers)B) Hazard
ALABAMA INSURANCE TEST EXAM 2025| BRAND
NEW ACTUAL EXAM WITH 100% VERIFIED
QUESTIONS AND CORRECT SOLUTIONS|
GUARANTEED VALUE PACK| ACE YOUR GRADES.
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the:
A) State Guaranty Association
B) Fair Labor Standards Board
C) Fair Credit Reporting Act
D) National Association of Insurance Commissioners - (answers)C) Fair Credit Act
What type of reinsurance contract involves two companies sharing automatically
sharing their risk exposure?
A) Arbitrage
B) Facultative
C) Excess
D) Treaty - (answers)D) Treaty
At what point must a life insurance applicant be informed of their rights that fall
under the Fair Credit Reporting Act?
,2|Page
A) Before the appointment is scheduled
B) Upon completion of the Application
C) At the policy's delivery
D) When the insurer receives the MIB Report - (answers)B) Upon completion of
the application
Which of the following requires insurers to disclose when an applicant's consumer
or credit history is being investigated?
A) 1970- Fair Credit Reporting Act
B) 1959- Intervention by (SEC) the securities and exchange commission
C) 1999- Financial Services Modernization Act
D) 1945 - McCarron-Ferguson Act - (answers)A) 1970- Fair Credit Reporting Act
Insurance policies issued by companies which allow their policy owners to
participate in the favorable experience of the company through payments of
dividend are known as:
A) Contributory Policies
B) Non-Contributory Policies
C) Participating Policies
D) Non-Participating Policies - (answers)C) participating policies
,3|Page
A group-owned insurance company that is formed to assume and spread the
liability risks of its members is known as a:
A) A treaty insurer
B) Risk Retention Group
C) Risk Assumption Group
D) A captive insurer - (answers)B) Risk Retention Group
Insurance polices issued by companies which are owned by stockholders and do
not pay policy dividends are known as:
A) contributory policies
B) non-contributory policies
C) participating policies
D) Non-participating policies - (answers)D) Non-participating policies
An insurance company that cedes a portion of an insured's coverage to another
insurer is said to be engaged in:
A) transference
B) reinsurance
C) participation
D) mutuality - (answers)B) reinsurance
, 4|Page
All of the following are examples of pure risk EXCEPT:
A) Losing money at a casino
B) Injured while playing football
C) falling at a casino and breaking a hip
D) Jewelry stolen during a home robbery - (answers)A) Losing money at a casino
Buying land with the anticipation of it going up in value is an example of:
A)Speculative risk
B) law of large numbers
C) perilous hazard
D) pure risk - (answers)A) Speculative risk
Which of the following is considered to be an event or condition that increases
the probability of an insured's loss?
A) Risk
B) Hazard
C) Indemnity
D) Peril - (answers)B) Hazard
