Health Insurance Licensing Exam
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1. What type of risks are in- Only pure risks, which involve the chance of loss but not gain.
surable?
2. What is the difference be- A peril is the direct cause of a loss, while a hazard is a condition that
tween a peril and a haz- increases the chance of a peril occurring.
ard?
3. What are the criteria for a A risk must be definable, measurable, beyond the insured's control,
risk to be insurable? common to a large group, and not catastrophic.
4. What is adverse selection Adverse selection occurs when high-risk individuals seek to buy or
in insurance? maintain insurance, which insurers try to avoid.
5. How does insurance Insurance allows individuals or groups to transfer the financial risk of
transfer financial risk? potential loss to an insurance company.
6. What is the definition of Pure risk involves only the possibility of a loss, with no chance of gain.
pure risk?
7. What is speculative risk? Speculative risk can result in either a loss or gain and is not insurable;
an example is gambling.
8. What is a direct loss? A direct loss is the immediate result of an event involving an insured
peril.
9. What is an indirect loss? An indirect loss is a loss that results from a direct loss.
10. What does exposure Exposure means being subject to a possible loss, which directly af-
mean in the context of in- fects the premiums charged.
surance?
11. What are the three types Moral hazards (character weaknesses), morale hazards (indifference
of hazards in insurance? to loss), and physical hazards (physical conditions).
, Health Insurance Licensing Exam
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12. What is a moral hazard? A moral hazard refers to character weaknesses or risky activities that
increase the possibility of loss.
13. What is a morale hazard? A morale hazard is a state of mind that creates indifference to loss,
such as reckless behavior.
14. What is a physical haz- A physical hazard is a condition that increases the chance of loss, such
ard? as working in dangerous conditions.
15. What are the five Avoid, reduce, retain, share, and transfer the risk.
risk management tech-
niques?
16. How can one avoid risk? By not engaging in dangerous activities, such as not driving after
drinking alcohol.
17. How can one reduce risk? By exercising, eating healthy, and avoiding poor habits.
18. What does it mean to re- Retaining risk means accepting the risk and dealing with potential
tain risk? losses personally, often using deductibles.
19. What is the concept of Sharing risk involves a group compensating a member who suffers a
sharing risk? loss, historically used in early forms of insurance.
20. What is the primary Transferring the risk to a third party, typically an insurance company,
method of risk transfer in in exchange for a premium.
modern insurance?
21. What makes an applicant An applicant is an insurable risk if they meet certain criteria for insur-
an insurable risk? ability.
22. What must be true about The loss must be definable, definite as to time, cause, and location,
the potential loss for it to and measurable.
be insurable?
, Health Insurance Licensing Exam
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23. Why is death considered Death is insurable because it is uncertain when it will occur, despite
an insurable peril? being inevitable.
24. What types of injuries are Self-inflicted injuries are not covered under most health policies.
typically excluded from
health policies?
25. What is the exclusion pe- Suicide is excluded for the first two years of a life insurance policy.
riod for suicide in life in-
surance policies?
26. What must be true about The risk must be part of a large group of similar risks, not financially
the risk for it to be insur- catastrophic, and not one of the policy's stated exclusions.
able?
27. What is the purpose Underwriting determines if the proposed risk for insurance should be
of underwriting in insur- accepted or rejected.
ance?
28. What principle does the It predicts future losses with great accuracy based on the principle
law of large numbers rely that the greater the number of incidents, the more the expected and
on? actual number of incidents tend to align.
29. Who uses mortality and Actuaries use these tables to determine life insurance premiums and
morbidity tables in insur- health insurance premiums.
ance?
30. What is adverse selection Adverse selection is the tendency of persons at greater risk of loss to
in the context of insur- seek out and maintain insurance, which underwriters aim to avoid.
ance?
31. Insurance providers can be classified by organizational structure,
place of domicile, type of distribution system, and financial rating.
, Health Insurance Licensing Exam
Study online at https://quizlet.com/_hko9nv
What are the different
ways to classify insurance
providers?
32. What is the signifi- All insurance providers must hold a certificate of authority in every
cance of a certificate of state where they transact business.
authority for insurance
providers?
33. Name two federal social Social Security (OASDI) and Medicare.
insurance programs.
34. What distinguishes a A stock insurance company is owned by stockholders and may pay
stock insurance company taxable dividends, while a mutual insurance company is owned by
from a mutual insurance policyowners and issues participating policies that may pay non-tax-
company? able dividends.
35. What are admitted insur- Admitted insurers have received a certificate of authority from a state
ers? to sell insurance.
36. What are non-admitted Non-admitted insurers are not certified to do business in a state and
insurers? can only operate through a surplus lines broker.
37. What are some exam- Examples include commercial insurance companies, managed care
ples of private insurance service providers, fraternal benefit societies, and self-insurers.
providers?
38. What is the role of actuar- Actuaries rely on the law of large numbers to determine the chances
ies in insurance? of death or serious illness for different demographics.
39. What is a participating A participating policy is one that may pay dividends to policyowners,
policy? which cannot be guaranteed.
40.
Study online at https://quizlet.com/_hko9nv
1. What type of risks are in- Only pure risks, which involve the chance of loss but not gain.
surable?
2. What is the difference be- A peril is the direct cause of a loss, while a hazard is a condition that
tween a peril and a haz- increases the chance of a peril occurring.
ard?
3. What are the criteria for a A risk must be definable, measurable, beyond the insured's control,
risk to be insurable? common to a large group, and not catastrophic.
4. What is adverse selection Adverse selection occurs when high-risk individuals seek to buy or
in insurance? maintain insurance, which insurers try to avoid.
5. How does insurance Insurance allows individuals or groups to transfer the financial risk of
transfer financial risk? potential loss to an insurance company.
6. What is the definition of Pure risk involves only the possibility of a loss, with no chance of gain.
pure risk?
7. What is speculative risk? Speculative risk can result in either a loss or gain and is not insurable;
an example is gambling.
8. What is a direct loss? A direct loss is the immediate result of an event involving an insured
peril.
9. What is an indirect loss? An indirect loss is a loss that results from a direct loss.
10. What does exposure Exposure means being subject to a possible loss, which directly af-
mean in the context of in- fects the premiums charged.
surance?
11. What are the three types Moral hazards (character weaknesses), morale hazards (indifference
of hazards in insurance? to loss), and physical hazards (physical conditions).
, Health Insurance Licensing Exam
Study online at https://quizlet.com/_hko9nv
12. What is a moral hazard? A moral hazard refers to character weaknesses or risky activities that
increase the possibility of loss.
13. What is a morale hazard? A morale hazard is a state of mind that creates indifference to loss,
such as reckless behavior.
14. What is a physical haz- A physical hazard is a condition that increases the chance of loss, such
ard? as working in dangerous conditions.
15. What are the five Avoid, reduce, retain, share, and transfer the risk.
risk management tech-
niques?
16. How can one avoid risk? By not engaging in dangerous activities, such as not driving after
drinking alcohol.
17. How can one reduce risk? By exercising, eating healthy, and avoiding poor habits.
18. What does it mean to re- Retaining risk means accepting the risk and dealing with potential
tain risk? losses personally, often using deductibles.
19. What is the concept of Sharing risk involves a group compensating a member who suffers a
sharing risk? loss, historically used in early forms of insurance.
20. What is the primary Transferring the risk to a third party, typically an insurance company,
method of risk transfer in in exchange for a premium.
modern insurance?
21. What makes an applicant An applicant is an insurable risk if they meet certain criteria for insur-
an insurable risk? ability.
22. What must be true about The loss must be definable, definite as to time, cause, and location,
the potential loss for it to and measurable.
be insurable?
, Health Insurance Licensing Exam
Study online at https://quizlet.com/_hko9nv
23. Why is death considered Death is insurable because it is uncertain when it will occur, despite
an insurable peril? being inevitable.
24. What types of injuries are Self-inflicted injuries are not covered under most health policies.
typically excluded from
health policies?
25. What is the exclusion pe- Suicide is excluded for the first two years of a life insurance policy.
riod for suicide in life in-
surance policies?
26. What must be true about The risk must be part of a large group of similar risks, not financially
the risk for it to be insur- catastrophic, and not one of the policy's stated exclusions.
able?
27. What is the purpose Underwriting determines if the proposed risk for insurance should be
of underwriting in insur- accepted or rejected.
ance?
28. What principle does the It predicts future losses with great accuracy based on the principle
law of large numbers rely that the greater the number of incidents, the more the expected and
on? actual number of incidents tend to align.
29. Who uses mortality and Actuaries use these tables to determine life insurance premiums and
morbidity tables in insur- health insurance premiums.
ance?
30. What is adverse selection Adverse selection is the tendency of persons at greater risk of loss to
in the context of insur- seek out and maintain insurance, which underwriters aim to avoid.
ance?
31. Insurance providers can be classified by organizational structure,
place of domicile, type of distribution system, and financial rating.
, Health Insurance Licensing Exam
Study online at https://quizlet.com/_hko9nv
What are the different
ways to classify insurance
providers?
32. What is the signifi- All insurance providers must hold a certificate of authority in every
cance of a certificate of state where they transact business.
authority for insurance
providers?
33. Name two federal social Social Security (OASDI) and Medicare.
insurance programs.
34. What distinguishes a A stock insurance company is owned by stockholders and may pay
stock insurance company taxable dividends, while a mutual insurance company is owned by
from a mutual insurance policyowners and issues participating policies that may pay non-tax-
company? able dividends.
35. What are admitted insur- Admitted insurers have received a certificate of authority from a state
ers? to sell insurance.
36. What are non-admitted Non-admitted insurers are not certified to do business in a state and
insurers? can only operate through a surplus lines broker.
37. What are some exam- Examples include commercial insurance companies, managed care
ples of private insurance service providers, fraternal benefit societies, and self-insurers.
providers?
38. What is the role of actuar- Actuaries rely on the law of large numbers to determine the chances
ies in insurance? of death or serious illness for different demographics.
39. What is a participating A participating policy is one that may pay dividends to policyowners,
policy? which cannot be guaranteed.
40.
