MASSACHUSETTS LIFE AND HEALTH
INSURANCE EXAM STUDY GUIDE WITH
QUESTIONS AND ANSWERS | GRADED
A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers | 100% Verified
Exam Prep
,Moral Hazard A belief that intentionally causing a loss is acceptable
Morale Hazard Carelessness
STARR Method of handling risk
S- Method of handling risks Sharing
T- Method of handling risk Transfer
A- Method of handling risk Avoidance
R- Method of handling risk Retention
R- Method of handling risk Reduction
Contract Policy An agreement between the insured and the insurer
Law of Large Numbers The larger the group, the more accurate losses can be predicted
CANHAM Risks Can be insured with the following characteristics
C- CANHAM Risks Calculable
A- CANHAM Risks Affordable
N- CANHAM Risks Non- Catastrophic
H- CANHAM Risks Homogeneous
A- CANHAM Risks Accidental
M- CANHAM Risks Measurable
Adverse Selection risks that have a greater than average chance of loss
,Reinsurance- An insurance company sells some of its risk to other insurance companies.
Facultative Reinsurance the reinsurer evaluates each risk before allowing the transfer
Treaty Reinsurance the reinsurer accepts the transfer according to an agreement called a treaty
Stock Insurer An insurer that is owned by its stockholders and formed as a corporation for the purpose
of earning a profit for the stockholders.- Issues Non Par Policies
Mutual Insurer An insurer that is owned by its policyholders and formed as a corporation for the
purpose of providing insurance to them.- Non Taxable dividends & Participating Polcies
Fraternal Insurer provides insurance and other benefits
must be a member of the society to get the benefits
Reciprocal Insurers unincorporated groups of people that provide insurance for one another through
individual indemnity agreements
Llyod's Associations Organizations that provide support facilities for underwriters or groups of individuals that
accept insurance risk.
Risk Retention Group A liability insurance company owned by its members, which are exposed to similar
liability risks by virtue of being in the same business or industry.
Risk Purchasing Groups Groups of people with similar insurance needs who form an organization to buy
insurance as a group.
Self-insurance a business that pays its own claims
Residual Market insurance from the state or federal government
Insurance Company Locations Domestic, Foreign, and Alien
Certificate of Authority state license for an insurance company
Admitted or Authorized state requires the insurance company to have a certificate of authority
, Non-admitted unauthorized-insurance company not required to have a Certificate of Authority from the
state
Surplus Lines any type of insurance for which there is no available market within the state, and the
coverage must be placed with a non admitted insurer
Methods of Marketing - Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
Agency The insurance agent acts on behalf of principal (Insurance Company)
Agent Authority express, implied, apparent
Fiduciary Trust - Promptly sends premiums to insurer
- Has knowledge of products
- Complies with laws and regulations
- Does not commingle funds
Legal Contract Consideration, Legal Purpose, Offer (Made by Insured), Acceptance, Competent Parties
Adhesion Policy written by the insurance company
aleatory not equal value - small premium for a large amount of coverage
Utmost Good Faith An obligation to act in complete honesty and to disclose all relevant facts.
indemnity pay for the loss but with no gain
representation believed to be true
Misrepresentation information that is not true, but would not affect the insurance company decision
Material Misrepresentation - a false statement that changes the outcome of issuing a policy
- generally with the health statement
INSURANCE EXAM STUDY GUIDE WITH
QUESTIONS AND ANSWERS | GRADED
A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers | 100% Verified
Exam Prep
,Moral Hazard A belief that intentionally causing a loss is acceptable
Morale Hazard Carelessness
STARR Method of handling risk
S- Method of handling risks Sharing
T- Method of handling risk Transfer
A- Method of handling risk Avoidance
R- Method of handling risk Retention
R- Method of handling risk Reduction
Contract Policy An agreement between the insured and the insurer
Law of Large Numbers The larger the group, the more accurate losses can be predicted
CANHAM Risks Can be insured with the following characteristics
C- CANHAM Risks Calculable
A- CANHAM Risks Affordable
N- CANHAM Risks Non- Catastrophic
H- CANHAM Risks Homogeneous
A- CANHAM Risks Accidental
M- CANHAM Risks Measurable
Adverse Selection risks that have a greater than average chance of loss
,Reinsurance- An insurance company sells some of its risk to other insurance companies.
Facultative Reinsurance the reinsurer evaluates each risk before allowing the transfer
Treaty Reinsurance the reinsurer accepts the transfer according to an agreement called a treaty
Stock Insurer An insurer that is owned by its stockholders and formed as a corporation for the purpose
of earning a profit for the stockholders.- Issues Non Par Policies
Mutual Insurer An insurer that is owned by its policyholders and formed as a corporation for the
purpose of providing insurance to them.- Non Taxable dividends & Participating Polcies
Fraternal Insurer provides insurance and other benefits
must be a member of the society to get the benefits
Reciprocal Insurers unincorporated groups of people that provide insurance for one another through
individual indemnity agreements
Llyod's Associations Organizations that provide support facilities for underwriters or groups of individuals that
accept insurance risk.
Risk Retention Group A liability insurance company owned by its members, which are exposed to similar
liability risks by virtue of being in the same business or industry.
Risk Purchasing Groups Groups of people with similar insurance needs who form an organization to buy
insurance as a group.
Self-insurance a business that pays its own claims
Residual Market insurance from the state or federal government
Insurance Company Locations Domestic, Foreign, and Alien
Certificate of Authority state license for an insurance company
Admitted or Authorized state requires the insurance company to have a certificate of authority
, Non-admitted unauthorized-insurance company not required to have a Certificate of Authority from the
state
Surplus Lines any type of insurance for which there is no available market within the state, and the
coverage must be placed with a non admitted insurer
Methods of Marketing - Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
Agency The insurance agent acts on behalf of principal (Insurance Company)
Agent Authority express, implied, apparent
Fiduciary Trust - Promptly sends premiums to insurer
- Has knowledge of products
- Complies with laws and regulations
- Does not commingle funds
Legal Contract Consideration, Legal Purpose, Offer (Made by Insured), Acceptance, Competent Parties
Adhesion Policy written by the insurance company
aleatory not equal value - small premium for a large amount of coverage
Utmost Good Faith An obligation to act in complete honesty and to disclose all relevant facts.
indemnity pay for the loss but with no gain
representation believed to be true
Misrepresentation information that is not true, but would not affect the insurance company decision
Material Misrepresentation - a false statement that changes the outcome of issuing a policy
- generally with the health statement
