PSI LIFE EXAM SCRIPT 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ An insurer owned by its policyholders, is called a. Answer: Mutual
insurer
◉ What is a participating life insurance policy? Answer: Contract that
allows the policyowner to receive a share of surplus in the form of
policy dividends
◉ An insurer enter into a contract with a third-party to ensure itself
against losses from insurance policies it issues. What is this agreement
called? Answer: Reinsurance
◉ John owns an insurance company that gives him the right to share and
then sure surplus. What kind of policy is this? Answer: Participating
◉ Which of the following is not a characteristic of reinsurance? Answer:
Increases the unearned premium reserved
◉ Which of the following is not a benefit of insurance? Answer: Losses
due to fraud are eliminated
,◉ When a mutual insurer becomes a stock company, the process is
called. Answer: Demutualization
◉ Which of the following is a contract that involves one party which
indemnifies another one a loss arises from an unknown event? Answer:
Insurance policy
◉ Which of the following is an insurer established by a parent
company's loss exposure's? Answer: Captive insurers
◉ Which of the following is not considered to be a definition for the
term "loss"? Answer: Probability that an event will occur
◉ Which of the following is not considered a definition of a risk?
Answer: The cause of loss
◉ Which of the following best describes the statement; " the more times,
and event is repeated, the more predictable the outcome becomes"?
Answer: Law of large numbers
◉ Which of the following would not be accomplished with the purchase
of an insurance policy? Answer: Risk is eliminated
◉ Which of the following is a situation where there is a possibility of
either a loss or gain? Answer: Speculative risk
, ◉ Which of the following is any situation that presents the possibility of
a loss? Answer: Loss
◉ An insurer having a large number of similar exposure units is
considered important because:. Answer: the greater the number insured,
the more accurately that is her can predict losses & set appropriate
premiums
◉ Which of these statements correctly describes risks? Answer: Pure
risk is the only insurable risk
◉ Which type of risk is gambling? Answer: Speculative risk
◉ Moral hazard is described as the:. Answer: increased chance of a loss
because of an insured's dishonest tendencies
◉ All of the following circumstances must be met for los retention to be
an effective, risk management technique, except. Answer: Probability of
loss is unknown
◉ All of the following circumstances must be met for lost attention to be
an effective risk management technique, except. Answer: Probability of
loss is unknown
ANSWERS GRADED A+
◉ An insurer owned by its policyholders, is called a. Answer: Mutual
insurer
◉ What is a participating life insurance policy? Answer: Contract that
allows the policyowner to receive a share of surplus in the form of
policy dividends
◉ An insurer enter into a contract with a third-party to ensure itself
against losses from insurance policies it issues. What is this agreement
called? Answer: Reinsurance
◉ John owns an insurance company that gives him the right to share and
then sure surplus. What kind of policy is this? Answer: Participating
◉ Which of the following is not a characteristic of reinsurance? Answer:
Increases the unearned premium reserved
◉ Which of the following is not a benefit of insurance? Answer: Losses
due to fraud are eliminated
,◉ When a mutual insurer becomes a stock company, the process is
called. Answer: Demutualization
◉ Which of the following is a contract that involves one party which
indemnifies another one a loss arises from an unknown event? Answer:
Insurance policy
◉ Which of the following is an insurer established by a parent
company's loss exposure's? Answer: Captive insurers
◉ Which of the following is not considered to be a definition for the
term "loss"? Answer: Probability that an event will occur
◉ Which of the following is not considered a definition of a risk?
Answer: The cause of loss
◉ Which of the following best describes the statement; " the more times,
and event is repeated, the more predictable the outcome becomes"?
Answer: Law of large numbers
◉ Which of the following would not be accomplished with the purchase
of an insurance policy? Answer: Risk is eliminated
◉ Which of the following is a situation where there is a possibility of
either a loss or gain? Answer: Speculative risk
, ◉ Which of the following is any situation that presents the possibility of
a loss? Answer: Loss
◉ An insurer having a large number of similar exposure units is
considered important because:. Answer: the greater the number insured,
the more accurately that is her can predict losses & set appropriate
premiums
◉ Which of these statements correctly describes risks? Answer: Pure
risk is the only insurable risk
◉ Which type of risk is gambling? Answer: Speculative risk
◉ Moral hazard is described as the:. Answer: increased chance of a loss
because of an insured's dishonest tendencies
◉ All of the following circumstances must be met for los retention to be
an effective, risk management technique, except. Answer: Probability of
loss is unknown
◉ All of the following circumstances must be met for lost attention to be
an effective risk management technique, except. Answer: Probability of
loss is unknown
