ARIZONA LIFE INSURANCE EXAM 2
QUESTIONS AND ANSWERS 2026 COMPLETE
EXAMINATION TEST WITH VERIFIED
SOLUTIONS
◉ Indemnify. Answer: To make a person whole by restoring that
person to the same financial position that existed before the loss.
◉ Policyowner. Answer: The insured
◉ Premium. Answer: A set amount of money for the insurance
◉ Insurer. Answer: The insurance company
◉ Insured. Answer: Person covered by insurance
◉ Policy. Answer: Legal document of a contract of insurance
◉ Loss. Answer: Reduction in the value of an asset
,◉ Claim. Answer: Demand for payment of the insurance benefit to
the person named in the policy
◉ Risk. Answer: Evaluated by two things: possibility of loss and the
uncertainty of whether or not the loss will occur
Uncertaintiy of financial loss
◉ Pure Risk. Answer: There is only a chance of loss only one
insurable
◉ Speculative Risk. Answer: Involves both an uncertainty of loss and
gain
◉ Peril. Answer: The immediate specific event causing loss and
giving rise to risk, cause of risk
◉ Hazard. Answer: Any factor that gives rise to peril, three types
◉ Physical hazards. Answer: Arise from material, structural, or
operational features of a risk situation. (Slippery Floors, unsanitary
conditions etc..)
◉ Moral hazards. Answer: Arise from people's habits and values,
filling a false claim ex
,◉ Morale hazards. Answer: Arise out of human carelessness or
irresponsibility, (failure to take safety precautions)
◉ Five methods for dealing with risk. Answer: Starr
◉ Sharing. Answer: A risk that cannot be avoided, choosing risk as a
means of handling the risk, by sharing risk we can also share the
potential losses.
◉ Transfer. Answer: Transferring the risk of loss to another party,
usually an insurance company more wiling to bear the risk.
◉ Avoidance. Answer: Avoiding the risk in the first place, not
undertaking a chance that can result in a chance of loss
◉ Reduction. Answer: When risks cannot be avoided, they may be
able to be reduced
Reducing the potential loss that might occur or by reducing the
amount the potential loss if it occurs
◉ Retention. Answer: Doing nothing about the risk, people assume
or retain the overall risk
, ◉ Law of large numbers. Answer: Ability to make predictions of
losses in a group is based upon the law of large numbers
◉ Insurable interest. Answer: Person having legitimate interest and
can benefit from preservation of the life or the property insured
◉ Deductible. Answer: The initial amount of a covered loss that the
insured must pay In order for insurer to pay for the remainder of the
claim
◉ Elimination period. Answer: The number of days an insured must
be disabled before disability income benefits become payable
◉ Co insurance. Answer: Within a specific coverage range the
insured and the insurer will share the allowed expenses
◉ Property insurance. Answer: Protects the insured against the
financial consequences of the direct or consequential loss
◉ Casualty insurance. Answer: Protects the insured against the
financial consequences of legal liability including that for
death,injury, disability or damage to real or personal property
QUESTIONS AND ANSWERS 2026 COMPLETE
EXAMINATION TEST WITH VERIFIED
SOLUTIONS
◉ Indemnify. Answer: To make a person whole by restoring that
person to the same financial position that existed before the loss.
◉ Policyowner. Answer: The insured
◉ Premium. Answer: A set amount of money for the insurance
◉ Insurer. Answer: The insurance company
◉ Insured. Answer: Person covered by insurance
◉ Policy. Answer: Legal document of a contract of insurance
◉ Loss. Answer: Reduction in the value of an asset
,◉ Claim. Answer: Demand for payment of the insurance benefit to
the person named in the policy
◉ Risk. Answer: Evaluated by two things: possibility of loss and the
uncertainty of whether or not the loss will occur
Uncertaintiy of financial loss
◉ Pure Risk. Answer: There is only a chance of loss only one
insurable
◉ Speculative Risk. Answer: Involves both an uncertainty of loss and
gain
◉ Peril. Answer: The immediate specific event causing loss and
giving rise to risk, cause of risk
◉ Hazard. Answer: Any factor that gives rise to peril, three types
◉ Physical hazards. Answer: Arise from material, structural, or
operational features of a risk situation. (Slippery Floors, unsanitary
conditions etc..)
◉ Moral hazards. Answer: Arise from people's habits and values,
filling a false claim ex
,◉ Morale hazards. Answer: Arise out of human carelessness or
irresponsibility, (failure to take safety precautions)
◉ Five methods for dealing with risk. Answer: Starr
◉ Sharing. Answer: A risk that cannot be avoided, choosing risk as a
means of handling the risk, by sharing risk we can also share the
potential losses.
◉ Transfer. Answer: Transferring the risk of loss to another party,
usually an insurance company more wiling to bear the risk.
◉ Avoidance. Answer: Avoiding the risk in the first place, not
undertaking a chance that can result in a chance of loss
◉ Reduction. Answer: When risks cannot be avoided, they may be
able to be reduced
Reducing the potential loss that might occur or by reducing the
amount the potential loss if it occurs
◉ Retention. Answer: Doing nothing about the risk, people assume
or retain the overall risk
, ◉ Law of large numbers. Answer: Ability to make predictions of
losses in a group is based upon the law of large numbers
◉ Insurable interest. Answer: Person having legitimate interest and
can benefit from preservation of the life or the property insured
◉ Deductible. Answer: The initial amount of a covered loss that the
insured must pay In order for insurer to pay for the remainder of the
claim
◉ Elimination period. Answer: The number of days an insured must
be disabled before disability income benefits become payable
◉ Co insurance. Answer: Within a specific coverage range the
insured and the insurer will share the allowed expenses
◉ Property insurance. Answer: Protects the insured against the
financial consequences of the direct or consequential loss
◉ Casualty insurance. Answer: Protects the insured against the
financial consequences of legal liability including that for
death,injury, disability or damage to real or personal property
