Life and Health Insurance Exam 1 with
Complete Solutions
UNIT 1: The term used to describe the individual who is covered by the insurance is
A. insurer
B. insured
C. policyowner
D. risk - ANS-B
Which of the following is a risk?
A. A car may need to have new brakes installed after several years of regular driving.
B. An individual may need medical attention after slipping on the ice and falling.
C. Both are examples of risk.
D. Neither is an example of risk. - ANS-B
The estimation of future losses is more accurate when information is from
A. a small select group
B. a large group
C. a medium-sized group
D. any size group; group size does not matter - ANS-A
The application of the law of large numbers enables insurers to
A. estimate the future losses of a class or group of people
B. predict the future losses of speci c individuals
C. charge higher premiums for insurance
D. calculate mortality charges - ANS-B
Which type of policy is designed to protect against the risk of living too long?
A. Casualty
B. Life
C. Annuity
D. Medical expense - ANS-C
Which of the following is a type of insurance company owned by its shareholders?
A. Mutual B. Stock
C. Lloyd's D. Reinsurer - ANS-B
The ZYX Insurance Company is incorporated in Alabama. While doing business in
Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - ANS-B
,The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas,
it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - ANS-
C
Self-insurance is an example of which method of handling risk?
A. Acceptance B. Transference C. Avoidance D. Reduction - ANS-A
Which of the following terms is used to denote insurance companies?
A. Broker
B. Exchange C. Corporation D. Insurer - ANS-D
A social device for spreading the chance of financial loss among a large number of
people is the definition of
A. hazard
B. risk
C. insurance
D. peril - ANS-C
Which of the following risks is most likely to be
insurable?
A. George is concerned about the financial impact his premature death would have on
his family.
B. Talyn is concerned about the financial impact large betting losses at the horse track
will have on his retirement savings.
C. John is concerned about the financial impact on his savings when his car eventually
becomes worn enough to need to be replaced.
D. Jewel is concerned about the nancial effect losing her hat would have on her weekly
spending money. - ANS-A
Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash
by
A. reduction B. avoidance C. transference D. retention - ANS-B
Chianna becomes injured in a car accident caused when she took her eyes off the road
to answer her cell phone. This is an example of
A. a physical hazard
B. a moral hazard
C. a morale hazard
D. a legal hazard - ANS-C
An arrangement in which an insurer transfers part of the insurance risk to another
insurance company is known as
A. avoidance
B. fraud
C. Lloyd's associations
, D. reinsurance - ANS-D
Which of the following is NOT an example of insurable interest?
A. Jose wishes to take out a life insurance policy on his own life to provide for his family
in the event of his death.
B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral
costs will be covered when the time comes.
C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor
is a careless driver and Juan thinks his neighbor is likely to die in a car accident.
D. Carla wishes to take out a life insurance policy on her best salesperson to protect the
business from lost sales in the event of the salesperson's death. - ANS-C
Kim is injured in a house fire. When the bills come, the insurance company pays 80% of
the cost, and Kim pays the rest. This is an example of
A. coinsurance
B. a deductible
C. extraneous insurance D. policy limits - ANS-A
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
A. a stock insurer
B. a mutual insurer C. a nonpro t insurer D. a fraternal insurer - ANS-B
Which of the following people represents several insurance companies but owns the
policy expirations?
A. Independent agent
B. Exclusive agent
C. Direct writing agent
D. General agent - ANS-A
Which of the following can bind an insurance company by oral or written agreement?
A. Property and casualty producer
B. Life producer
C. Broker
D. Solicitor - ANS-A
lloyds - ANS-are association, not an insurance company
captiv - ANS-wholly-own subsidiary through the parent company
re-insurers - ANS-insurance company who insure other insurance company
(reciprocal=provide insurance to each other)
Agent - ANS-represents the company
broker - ANS-represents the client
Complete Solutions
UNIT 1: The term used to describe the individual who is covered by the insurance is
A. insurer
B. insured
C. policyowner
D. risk - ANS-B
Which of the following is a risk?
A. A car may need to have new brakes installed after several years of regular driving.
B. An individual may need medical attention after slipping on the ice and falling.
C. Both are examples of risk.
D. Neither is an example of risk. - ANS-B
The estimation of future losses is more accurate when information is from
A. a small select group
B. a large group
C. a medium-sized group
D. any size group; group size does not matter - ANS-A
The application of the law of large numbers enables insurers to
A. estimate the future losses of a class or group of people
B. predict the future losses of speci c individuals
C. charge higher premiums for insurance
D. calculate mortality charges - ANS-B
Which type of policy is designed to protect against the risk of living too long?
A. Casualty
B. Life
C. Annuity
D. Medical expense - ANS-C
Which of the following is a type of insurance company owned by its shareholders?
A. Mutual B. Stock
C. Lloyd's D. Reinsurer - ANS-B
The ZYX Insurance Company is incorporated in Alabama. While doing business in
Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - ANS-B
,The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas,
it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - ANS-
C
Self-insurance is an example of which method of handling risk?
A. Acceptance B. Transference C. Avoidance D. Reduction - ANS-A
Which of the following terms is used to denote insurance companies?
A. Broker
B. Exchange C. Corporation D. Insurer - ANS-D
A social device for spreading the chance of financial loss among a large number of
people is the definition of
A. hazard
B. risk
C. insurance
D. peril - ANS-C
Which of the following risks is most likely to be
insurable?
A. George is concerned about the financial impact his premature death would have on
his family.
B. Talyn is concerned about the financial impact large betting losses at the horse track
will have on his retirement savings.
C. John is concerned about the financial impact on his savings when his car eventually
becomes worn enough to need to be replaced.
D. Jewel is concerned about the nancial effect losing her hat would have on her weekly
spending money. - ANS-A
Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash
by
A. reduction B. avoidance C. transference D. retention - ANS-B
Chianna becomes injured in a car accident caused when she took her eyes off the road
to answer her cell phone. This is an example of
A. a physical hazard
B. a moral hazard
C. a morale hazard
D. a legal hazard - ANS-C
An arrangement in which an insurer transfers part of the insurance risk to another
insurance company is known as
A. avoidance
B. fraud
C. Lloyd's associations
, D. reinsurance - ANS-D
Which of the following is NOT an example of insurable interest?
A. Jose wishes to take out a life insurance policy on his own life to provide for his family
in the event of his death.
B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral
costs will be covered when the time comes.
C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor
is a careless driver and Juan thinks his neighbor is likely to die in a car accident.
D. Carla wishes to take out a life insurance policy on her best salesperson to protect the
business from lost sales in the event of the salesperson's death. - ANS-C
Kim is injured in a house fire. When the bills come, the insurance company pays 80% of
the cost, and Kim pays the rest. This is an example of
A. coinsurance
B. a deductible
C. extraneous insurance D. policy limits - ANS-A
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
A. a stock insurer
B. a mutual insurer C. a nonpro t insurer D. a fraternal insurer - ANS-B
Which of the following people represents several insurance companies but owns the
policy expirations?
A. Independent agent
B. Exclusive agent
C. Direct writing agent
D. General agent - ANS-A
Which of the following can bind an insurance company by oral or written agreement?
A. Property and casualty producer
B. Life producer
C. Broker
D. Solicitor - ANS-A
lloyds - ANS-are association, not an insurance company
captiv - ANS-wholly-own subsidiary through the parent company
re-insurers - ANS-insurance company who insure other insurance company
(reciprocal=provide insurance to each other)
Agent - ANS-represents the company
broker - ANS-represents the client
