Mass State Life Insurance Exam Latest 2025
Questions and Answers Graded A+|Assured Success
Which of the following can be defined as a cause of a loss? - CORRECT ANSWER-peril
What type of risk involves the potential for loss and the possibility for gain? - CORRECT
ANSWER-speculative
,Purchasing insurance is an example of risk - CORRECT ANSWER-transference
A business becoming incorporated is an example of risk ____. - CORRECT ANSWER-
transfer
Which of the following is NOT an example of risk retention? - CORRECT ANSWER-Not
doing a business deal after deciding it would be too risky
legal contract must have: offer and acceptance - CORRECT ANSWER--an offer is made
when the applicant submits an application for insurance to the insurance company
-the offer is accepted after it has been approved by the insurance company's underwriters
legal contract must have: consideration - CORRECT ANSWER-something of value that
each party gives to the other
-on part of insured: payment of premium
-on part of insurance company: promise to pay in event of loss
legal contract must have: legal purpose - CORRECT ANSWER--must be legal and not
against public policy
-has legal purpose if contract has a insurable interests and the insured has provided written
consent
,legal contract must have: competent parties - CORRECT ANSWER--all parties must be of
legal competence
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
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
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
Questions and Answers Graded A+|Assured Success
Which of the following can be defined as a cause of a loss? - CORRECT ANSWER-peril
What type of risk involves the potential for loss and the possibility for gain? - CORRECT
ANSWER-speculative
,Purchasing insurance is an example of risk - CORRECT ANSWER-transference
A business becoming incorporated is an example of risk ____. - CORRECT ANSWER-
transfer
Which of the following is NOT an example of risk retention? - CORRECT ANSWER-Not
doing a business deal after deciding it would be too risky
legal contract must have: offer and acceptance - CORRECT ANSWER--an offer is made
when the applicant submits an application for insurance to the insurance company
-the offer is accepted after it has been approved by the insurance company's underwriters
legal contract must have: consideration - CORRECT ANSWER-something of value that
each party gives to the other
-on part of insured: payment of premium
-on part of insurance company: promise to pay in event of loss
legal contract must have: legal purpose - CORRECT ANSWER--must be legal and not
against public policy
-has legal purpose if contract has a insurable interests and the insured has provided written
consent
,legal contract must have: competent parties - CORRECT ANSWER--all parties must be of
legal competence
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
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
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
