Mass State Life Insurance Exam Newest 2026/2027
Questions and Correct Detailed Answers Already
Graded A+
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
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
, pure risk - CORRECT ANSWER--a situation that can only result in a loss, there is
no opportunity for financial gain
-only type of risk that is insurable
treatment of risk through: avoidance - CORRECT ANSWER-simply avoiding as
many risks as possible
-effective but not always practical
treatment of risk through- reduction - CORRECT ANSWER-since we cannot
avoid risk entirely we often attempt to lessen the possibility of a loss by taking
acting to reduce the risk
-
treatment of risk through- sharing - CORRECT ANSWER-when a group of
individuals or businesses with similar exposures share the losses that occur within
that group
-reciprocal insurance exchange is a formal risk sharing arrangement
treatment of risk through- retention - CORRECT ANSWER-also known as self-
insurance: when individuals have the financial ability to fund losses by themselves
when they occur
Questions and Correct Detailed Answers Already
Graded A+
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
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
, pure risk - CORRECT ANSWER--a situation that can only result in a loss, there is
no opportunity for financial gain
-only type of risk that is insurable
treatment of risk through: avoidance - CORRECT ANSWER-simply avoiding as
many risks as possible
-effective but not always practical
treatment of risk through- reduction - CORRECT ANSWER-since we cannot
avoid risk entirely we often attempt to lessen the possibility of a loss by taking
acting to reduce the risk
-
treatment of risk through- sharing - CORRECT ANSWER-when a group of
individuals or businesses with similar exposures share the losses that occur within
that group
-reciprocal insurance exchange is a formal risk sharing arrangement
treatment of risk through- retention - CORRECT ANSWER-also known as self-
insurance: when individuals have the financial ability to fund losses by themselves
when they occur
