Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
Alabama Life & Health Insurance Practice Exam
1. Insurance is a method risk is transferred to an insurer for consideration upto ANS a
predetermined limit.
2. Which of the following would be considered proper establishment of insur-able interest in
the life insurance area? ANS 1. spouses in each other
2. parents in their children
3. creditors in their debtors
3. Which of the following statements about the average number of people whodie each
year is true? ANS It is called the mortality rate
4. An insurance contract is an aleatory contract.This means ANS Equal value is notnecessarily
given by both parties to the contract
5. A life insurance policy is a unilateral contract because ANS Only the insurancecompany
is bound to live up to its side of the agreement
6. All of the following are elements of a contract ANS 1. Legal purpose
2. Offer and acceptance
1 of 43 9/10/2024, 9:18
,Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
3. Consideration
7. A company that has not received permission from an Insurance Commis- sioner to do
business in his or her state is called a/an ANS Unauthorized company
8. Misrepresentation is ANS A written or oral statement which is false
9. The chance that a person who anticipates a loss will purchase insuranceis ANS Adverse
Selection
10. Assuming a deductible with your insurance policy is which type of riskmanagement
technique? ANS Assumption of risk
11. In the Health-Disability area we use what type data to produce rates? ANS Mor-bidity
tables
12. A company that is licensed to sell insurance in a particular state is ANS Anauthorized
company
13. he most effective way to ensure that the applicant will accept the policy when it is
issued is ANS To have the applicant pay the initial premium at the time ofapplication
14. Which is the proper term for a company owned by its policy owner? ANS Amutual
insurance company
15. The punishment for fraud or making false statements may include ANS Fines,
2 of 43 9/10/2024, 9:18
,Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
imprisonment or both
16. A producer who is acting as an agent is representing ANS Always the insurer
17. The premium paid and the statements on the application to the insurancecompany is
called ANS consideration
18. In life insurance the insurable interest requirements is generally satisfiedif ANS the
policy owner must expect to suffer a loss if the insured dies.
3 of 43 9/10/2024, 9:18
,Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
19. Each of the following would be an element in the definition of fraud ANS 1.
Statements relied upon by a second party who then suffers a loss
2. Intent to gain advantage
3. An intentional misrepresentation made by the applicant
20. Risk may be defined as ANS The uncertainty of loss
21. A father did not reveal that his daughter suffers from asthma on the application for
a health policy. In order to avoid paying a claim the insurermust ANS prove this was
both intentional and material
22. In order to be valid, a contract must be between individuals considered legally able to
enter into an agreement. This principle is known as ANS competentparties
23. When signing the application form, the proposed insured is ANS Making aformal
request to the company for an insurance policy.
24. What constitutes an entire insurance contract? ANS The policy, its endorse-ments,
and any attached papers
25. T/F Misrepresentations on the part of an applicant as to the health or otherconditions of
the applicant must be deliberate and material for an insurer to avoid coverage. ANS True
26. T/F Misrepresentation is a deliberate false representation on the part of the agent or
insurer as to the terms and conditions of the policy its terms andbenefits. ANS True
4 of 43 9/10/2024, 9:18
Alabama Life & Health Insurance Practice Exam
1. Insurance is a method risk is transferred to an insurer for consideration upto ANS a
predetermined limit.
2. Which of the following would be considered proper establishment of insur-able interest in
the life insurance area? ANS 1. spouses in each other
2. parents in their children
3. creditors in their debtors
3. Which of the following statements about the average number of people whodie each
year is true? ANS It is called the mortality rate
4. An insurance contract is an aleatory contract.This means ANS Equal value is notnecessarily
given by both parties to the contract
5. A life insurance policy is a unilateral contract because ANS Only the insurancecompany
is bound to live up to its side of the agreement
6. All of the following are elements of a contract ANS 1. Legal purpose
2. Offer and acceptance
1 of 43 9/10/2024, 9:18
,Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
3. Consideration
7. A company that has not received permission from an Insurance Commis- sioner to do
business in his or her state is called a/an ANS Unauthorized company
8. Misrepresentation is ANS A written or oral statement which is false
9. The chance that a person who anticipates a loss will purchase insuranceis ANS Adverse
Selection
10. Assuming a deductible with your insurance policy is which type of riskmanagement
technique? ANS Assumption of risk
11. In the Health-Disability area we use what type data to produce rates? ANS Mor-bidity
tables
12. A company that is licensed to sell insurance in a particular state is ANS Anauthorized
company
13. he most effective way to ensure that the applicant will accept the policy when it is
issued is ANS To have the applicant pay the initial premium at the time ofapplication
14. Which is the proper term for a company owned by its policy owner? ANS Amutual
insurance company
15. The punishment for fraud or making false statements may include ANS Fines,
2 of 43 9/10/2024, 9:18
,Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
imprisonment or both
16. A producer who is acting as an agent is representing ANS Always the insurer
17. The premium paid and the statements on the application to the insurancecompany is
called ANS consideration
18. In life insurance the insurable interest requirements is generally satisfiedif ANS the
policy owner must expect to suffer a loss if the insured dies.
3 of 43 9/10/2024, 9:18
,Alabama Life and Health Insuranc.pdf file:///C:/Users/Admin/Downloads/Alabama%20Life%20and%20He
19. Each of the following would be an element in the definition of fraud ANS 1.
Statements relied upon by a second party who then suffers a loss
2. Intent to gain advantage
3. An intentional misrepresentation made by the applicant
20. Risk may be defined as ANS The uncertainty of loss
21. A father did not reveal that his daughter suffers from asthma on the application for
a health policy. In order to avoid paying a claim the insurermust ANS prove this was
both intentional and material
22. In order to be valid, a contract must be between individuals considered legally able to
enter into an agreement. This principle is known as ANS competentparties
23. When signing the application form, the proposed insured is ANS Making aformal
request to the company for an insurance policy.
24. What constitutes an entire insurance contract? ANS The policy, its endorse-ments,
and any attached papers
25. T/F Misrepresentations on the part of an applicant as to the health or otherconditions of
the applicant must be deliberate and material for an insurer to avoid coverage. ANS True
26. T/F Misrepresentation is a deliberate false representation on the part of the agent or
insurer as to the terms and conditions of the policy its terms andbenefits. ANS True
4 of 43 9/10/2024, 9:18
