WASHINGTON LIFE/HEALTH INSURANCE EXAM
QUESTIONS AND ANSWERS 2025
policy owner - CORRECT ANSWER-usually, but not always the person covered by the
policy
beneficiary - CORRECT ANSWER-the person who is paid when a claim
is submitted
agent/producer - CORRECT ANSWER-acts as a legal representative
of the insurance company
broker - CORRECT ANSWER-representative of the Insured, not the insurance company
risk - CORRECT ANSWER-The chance or uncertainty of loss
Pure risk - CORRECT ANSWER-the chance of experiencing a loss (without the
possibility of gain). Only downside, no upside.
Speculative risk - CORRECT ANSWER-s the chance of loss one accepts in the hope of
realizing a gain
Risk avoidance - CORRECT ANSWER-staying away from risky activities altogether
Risk reduction - CORRECT ANSWER-reduce the chance of something bad happening
Risk shifting - CORRECT ANSWER-Get someone else to accept the risk
Buying insurance - CORRECT ANSWER-transfer a portion of your risk to the Insurer
Risk Retention - CORRECT ANSWER-the individual or business that opts not to buy
insurance retains the entire risk
Indemnification - CORRECT ANSWER-an insurance concept that states that some
portions of the insurance industry prefer that we be made only whole after a loss rather
than coming out ahead (Only getting back what you are owed, not getting more than
what you had to start with)
Subrogation - CORRECT ANSWER-the transfer to the Insurer of the Insured's rights to
recover damages from a responsible third party
,Peril - CORRECT ANSWER-the cause of loss
Law of Large numbers - CORRECT ANSWER-the mathematical concept that makes it
easier to predict losses if we have a large number of Insureds
Insurable losses are... - CORRECT ANSWER-Economic, Predictable, Accidental,
Measurable, Non-Catastrophic
non-participating companies - CORRECT ANSWER-Stock companies that exist for the
sole purpose of generating profits
for their stockholders
participating companies - CORRECT ANSWER-A company owned by its policy holders
where the profits are distributed among policy holders
Social Security act - CORRECT ANSWER-a guarantee that government
would never again allow workers (and their families) to become
destitute
OASDI (Social Security) - CORRECT ANSWER-Old Age, Survivors, and Disability
Insurance...Federal Government law
FICA - CORRECT ANSWER-Federal Insurance Contributions Act
or FICA, payroll taxes levied on employees, employers, and the self-employed.
Not covered by social security - CORRECT ANSWER-payroll taxes levied on
employees, employers,
and the self-employed.
FICA Fully Insured - CORRECT ANSWER-(Worked for 10 years) payroll taxes levied on
employees, employers,
and the self-employed.
Retirement Benefits;
Disability Income Benefits; and
Survivor Benefits.
Currently Insured - CORRECT ANSWER-Worked less than ten years. Only eligeable for
Survivor Benefits
,Average Indexed Monthly
Earnings - CORRECT ANSWER-Averages earnings over time period. Either way, the
more a worker
has paid into Social Security, the more the worker (or dependents)
will get out of it. (What you get at age 65)
Primary Insurance Amount (PIA). - CORRECT ANSWER-Full retirement benefit
someone is entitled to at age 65 (some cases, 66-67)
elimination period (Disability) - CORRECT ANSWER-the person must be
disabled for 5 months before starting to receive Disability
Benefits
underwriting - CORRECT ANSWER-the selection and classification of risks.
actuary - CORRECT ANSWER-A person who tracks the lifespan and chance of illness
or accident based on specific factors
Mortality table - CORRECT ANSWER-predict the age at which
people in a given group are likely to die (Used by life insurers)
Morbidity table - CORRECT ANSWER-predict how often
people in a given group are likely to get sick or have an
accident. (Used by health insurers)
field underwriters - CORRECT ANSWER-Insurance agents
declined risks - CORRECT ANSWER-Applicants who are too risky are declined
Adverse selection - CORRECT ANSWER-the tendency for high
risk people to be more likely to apply for insurance than low risk
people.
Premium = - CORRECT ANSWER-Risk + Expenses - Interest
Premium mode - CORRECT ANSWER-how frequently an Insured will pay the premium
Accelerated Death Benefit Rider - CORRECT ANSWER-requires the Insurer to pay out
part of the death benefit
, (usually 50%) if the Insured has a diagnosis of a particular illness
likely to cause death within 12 months
Viatical Settlements - CORRECT ANSWER-sell the policy to an investment company
that will continue to make the premium payments and collect the death benefit when the
Insured dies. The Insured will sell only if an investment company will pay more than the
current cash surrender value.
Group Policies share
these three characteristics - CORRECT ANSWER-Reduced Cost;
Reduced Adverse Selection; and
Fixed Benefits.
Adverse selection - CORRECT ANSWER-people who need
insurance the most are the ones most likely to buy it - and buy
more of it causing more loss claims
experience rating - CORRECT ANSWER-looks at the claims
history for this particular group.
Experience rating puts the burden for
high premiums (and the credit for low
ones) squarely on the shoulders of
the group, because of the particular
group's past claims history
community rating - CORRECT ANSWER-combines claims history over a class of
groups that are similar in nature and
may even be in a similar geographic area
Master Contract - CORRECT ANSWER-The one overriding contract that can affect the
lives of hundreds
or thousands
Certificate of Insurance - CORRECT ANSWER-a booklet explaining the coverage and
an identification card
Single Employer Group - CORRECT ANSWER-an
insurance plan administered by an employer to cover employees,
officers, and even the board of directors (but not shareholders
because they aren't employees).
QUESTIONS AND ANSWERS 2025
policy owner - CORRECT ANSWER-usually, but not always the person covered by the
policy
beneficiary - CORRECT ANSWER-the person who is paid when a claim
is submitted
agent/producer - CORRECT ANSWER-acts as a legal representative
of the insurance company
broker - CORRECT ANSWER-representative of the Insured, not the insurance company
risk - CORRECT ANSWER-The chance or uncertainty of loss
Pure risk - CORRECT ANSWER-the chance of experiencing a loss (without the
possibility of gain). Only downside, no upside.
Speculative risk - CORRECT ANSWER-s the chance of loss one accepts in the hope of
realizing a gain
Risk avoidance - CORRECT ANSWER-staying away from risky activities altogether
Risk reduction - CORRECT ANSWER-reduce the chance of something bad happening
Risk shifting - CORRECT ANSWER-Get someone else to accept the risk
Buying insurance - CORRECT ANSWER-transfer a portion of your risk to the Insurer
Risk Retention - CORRECT ANSWER-the individual or business that opts not to buy
insurance retains the entire risk
Indemnification - CORRECT ANSWER-an insurance concept that states that some
portions of the insurance industry prefer that we be made only whole after a loss rather
than coming out ahead (Only getting back what you are owed, not getting more than
what you had to start with)
Subrogation - CORRECT ANSWER-the transfer to the Insurer of the Insured's rights to
recover damages from a responsible third party
,Peril - CORRECT ANSWER-the cause of loss
Law of Large numbers - CORRECT ANSWER-the mathematical concept that makes it
easier to predict losses if we have a large number of Insureds
Insurable losses are... - CORRECT ANSWER-Economic, Predictable, Accidental,
Measurable, Non-Catastrophic
non-participating companies - CORRECT ANSWER-Stock companies that exist for the
sole purpose of generating profits
for their stockholders
participating companies - CORRECT ANSWER-A company owned by its policy holders
where the profits are distributed among policy holders
Social Security act - CORRECT ANSWER-a guarantee that government
would never again allow workers (and their families) to become
destitute
OASDI (Social Security) - CORRECT ANSWER-Old Age, Survivors, and Disability
Insurance...Federal Government law
FICA - CORRECT ANSWER-Federal Insurance Contributions Act
or FICA, payroll taxes levied on employees, employers, and the self-employed.
Not covered by social security - CORRECT ANSWER-payroll taxes levied on
employees, employers,
and the self-employed.
FICA Fully Insured - CORRECT ANSWER-(Worked for 10 years) payroll taxes levied on
employees, employers,
and the self-employed.
Retirement Benefits;
Disability Income Benefits; and
Survivor Benefits.
Currently Insured - CORRECT ANSWER-Worked less than ten years. Only eligeable for
Survivor Benefits
,Average Indexed Monthly
Earnings - CORRECT ANSWER-Averages earnings over time period. Either way, the
more a worker
has paid into Social Security, the more the worker (or dependents)
will get out of it. (What you get at age 65)
Primary Insurance Amount (PIA). - CORRECT ANSWER-Full retirement benefit
someone is entitled to at age 65 (some cases, 66-67)
elimination period (Disability) - CORRECT ANSWER-the person must be
disabled for 5 months before starting to receive Disability
Benefits
underwriting - CORRECT ANSWER-the selection and classification of risks.
actuary - CORRECT ANSWER-A person who tracks the lifespan and chance of illness
or accident based on specific factors
Mortality table - CORRECT ANSWER-predict the age at which
people in a given group are likely to die (Used by life insurers)
Morbidity table - CORRECT ANSWER-predict how often
people in a given group are likely to get sick or have an
accident. (Used by health insurers)
field underwriters - CORRECT ANSWER-Insurance agents
declined risks - CORRECT ANSWER-Applicants who are too risky are declined
Adverse selection - CORRECT ANSWER-the tendency for high
risk people to be more likely to apply for insurance than low risk
people.
Premium = - CORRECT ANSWER-Risk + Expenses - Interest
Premium mode - CORRECT ANSWER-how frequently an Insured will pay the premium
Accelerated Death Benefit Rider - CORRECT ANSWER-requires the Insurer to pay out
part of the death benefit
, (usually 50%) if the Insured has a diagnosis of a particular illness
likely to cause death within 12 months
Viatical Settlements - CORRECT ANSWER-sell the policy to an investment company
that will continue to make the premium payments and collect the death benefit when the
Insured dies. The Insured will sell only if an investment company will pay more than the
current cash surrender value.
Group Policies share
these three characteristics - CORRECT ANSWER-Reduced Cost;
Reduced Adverse Selection; and
Fixed Benefits.
Adverse selection - CORRECT ANSWER-people who need
insurance the most are the ones most likely to buy it - and buy
more of it causing more loss claims
experience rating - CORRECT ANSWER-looks at the claims
history for this particular group.
Experience rating puts the burden for
high premiums (and the credit for low
ones) squarely on the shoulders of
the group, because of the particular
group's past claims history
community rating - CORRECT ANSWER-combines claims history over a class of
groups that are similar in nature and
may even be in a similar geographic area
Master Contract - CORRECT ANSWER-The one overriding contract that can affect the
lives of hundreds
or thousands
Certificate of Insurance - CORRECT ANSWER-a booklet explaining the coverage and
an identification card
Single Employer Group - CORRECT ANSWER-an
insurance plan administered by an employer to cover employees,
officers, and even the board of directors (but not shareholders
because they aren't employees).
