Texas State Exam Simulator - Life
and Health Insurance (2025-2026)
Test with Correct Verified and Well
Analyzed Answers Graded A+
What type of risk involves the potential for loss AND the possibility
for gain?
Speculative
Homogeneous
Adverse
Pure
Speculative
Which of the following can be defined as a cause of loss?
Peril
Hazard
Adversity
Risk
Peril
Which of the following types of risk is insurable?
Pure
Speculative
Operational
Physical
Pure
Which one of these is NOT considered to be an element of an
insurable risk?
Speculative risk
,Loss must be due to chance
Pure risk
Loss cannot be catastrophic
Speculative risk
Risk ____ is the process of analyzing exposures that create risk and
designing programs to handle them.
Management
Acceptance
Administration
Transfer
Management
What type of risk involves the potential for loss with no possibility for
gain?
Pure risk
Speculative risk
Adverse risk
Morale risk
Pure risk
Which of the following describes the act of insuring a risk against a
possible loss?
Loss management
Hazard reduction
Risk avoidance
Risk tansfer
Risk transfer
Which of the following can be defined as "the potential for loss?"
Transference
Peril
Risk
Hazard
Risk
Which of these statements regarding insurance is false?
Speculative risk cannot be insured
As the number of insured units increases, the number of losses
decreases
,One-way insurers deal with catastrophic loss is through reinsurance
Pure risk can be insured
As the number of insured units increases, the number of losses
decreases
An insurable risk requires?
That the loss must be incalculable
The loss must be catastrophic
That the chance of loss be calculable
That the chance for both a loss or gain exists
That the chance of loss be calculable
Life and health insurance policies are:
non-lateral contracts
Bilateral contracts
Unilateral contracts
multi-lateral contracts
Unilateral contracts
When must insurable interest be present in order for a life insurance
policy to be valid?
Before the insured dies
When the application is made
Within the incontestability period
When the insured dies
When the application is made
A life insurance arrangement which circumvents insurable interest
statues is called:
Investor-Originated Life Insurance
A contract of adhesion
Key person insurance
An indemnity contract
Investor-Originated Life Insurance
A policy of adhesion can only be modified by whom?
The primary beneficiary
The agent
The insurance company
The applicant
, The insurance company
If a contract of adhesion contains complicated language, to whom
would the interpretation be in favor of?
Insurer
Insured
Reinsurer
Beneficiary
Insured
Stranger Originated Life Insurance (STOLI) has been found to be in
violation of which of the following contractual elements?
Consideration
Competent Parties
Legal Purpose (Insurable Interest)
Offer/Acceptance
Legal Purpose (Insurable Interest)
Taking receipt of premiums and holding them for the insurance
company is an example of:
Misappropriation
Fiduciary responsibility
Theft
Commingling
Fiduciary responsibility
Which of the following BEST describes a warranty?
Guarantees that an insurance company will pay a benefit
Statement believed to be true to the best of one's knowledge
Statement guaranteed to be true
Cannot be used to void the contract
Statement guaranteed to be true
A life insurance policy would be considered a wagering contract
WITHOUT:
Insurable interest
Agent solicitation
Constructive delivery
Premium payment
Insurable interest
and Health Insurance (2025-2026)
Test with Correct Verified and Well
Analyzed Answers Graded A+
What type of risk involves the potential for loss AND the possibility
for gain?
Speculative
Homogeneous
Adverse
Pure
Speculative
Which of the following can be defined as a cause of loss?
Peril
Hazard
Adversity
Risk
Peril
Which of the following types of risk is insurable?
Pure
Speculative
Operational
Physical
Pure
Which one of these is NOT considered to be an element of an
insurable risk?
Speculative risk
,Loss must be due to chance
Pure risk
Loss cannot be catastrophic
Speculative risk
Risk ____ is the process of analyzing exposures that create risk and
designing programs to handle them.
Management
Acceptance
Administration
Transfer
Management
What type of risk involves the potential for loss with no possibility for
gain?
Pure risk
Speculative risk
Adverse risk
Morale risk
Pure risk
Which of the following describes the act of insuring a risk against a
possible loss?
Loss management
Hazard reduction
Risk avoidance
Risk tansfer
Risk transfer
Which of the following can be defined as "the potential for loss?"
Transference
Peril
Risk
Hazard
Risk
Which of these statements regarding insurance is false?
Speculative risk cannot be insured
As the number of insured units increases, the number of losses
decreases
,One-way insurers deal with catastrophic loss is through reinsurance
Pure risk can be insured
As the number of insured units increases, the number of losses
decreases
An insurable risk requires?
That the loss must be incalculable
The loss must be catastrophic
That the chance of loss be calculable
That the chance for both a loss or gain exists
That the chance of loss be calculable
Life and health insurance policies are:
non-lateral contracts
Bilateral contracts
Unilateral contracts
multi-lateral contracts
Unilateral contracts
When must insurable interest be present in order for a life insurance
policy to be valid?
Before the insured dies
When the application is made
Within the incontestability period
When the insured dies
When the application is made
A life insurance arrangement which circumvents insurable interest
statues is called:
Investor-Originated Life Insurance
A contract of adhesion
Key person insurance
An indemnity contract
Investor-Originated Life Insurance
A policy of adhesion can only be modified by whom?
The primary beneficiary
The agent
The insurance company
The applicant
, The insurance company
If a contract of adhesion contains complicated language, to whom
would the interpretation be in favor of?
Insurer
Insured
Reinsurer
Beneficiary
Insured
Stranger Originated Life Insurance (STOLI) has been found to be in
violation of which of the following contractual elements?
Consideration
Competent Parties
Legal Purpose (Insurable Interest)
Offer/Acceptance
Legal Purpose (Insurable Interest)
Taking receipt of premiums and holding them for the insurance
company is an example of:
Misappropriation
Fiduciary responsibility
Theft
Commingling
Fiduciary responsibility
Which of the following BEST describes a warranty?
Guarantees that an insurance company will pay a benefit
Statement believed to be true to the best of one's knowledge
Statement guaranteed to be true
Cannot be used to void the contract
Statement guaranteed to be true
A life insurance policy would be considered a wagering contract
WITHOUT:
Insurable interest
Agent solicitation
Constructive delivery
Premium payment
Insurable interest
