Virginia Life, Health and Annuities
Exam Questions with complete
solution 2025/2026
Insurance - correct answer ✔transfer of risk
RIsk - correct answer ✔uncertainty/possibility of a loss
Two types of risk - correct answer ✔Pure and Speculative
Speculative Risk - correct answer ✔chance of loss or gain; not insurable
Pure Risk - correct answer ✔chance of loss only; can be insured
Exposure - correct answer ✔risks for which the insurance company would be liable
Peril - correct answer ✔cause of loss
Hazard (there are 3 types) - correct answer ✔something that causes an increase in the chance of loss
Physical Hazard - correct answer ✔the hazard can be seen
Moral Hazard - correct answer ✔a belief that intentionally causing a loss is acceptable
Morale Hazard - correct answer ✔carelessness
,Methods of Handling Risk (STARR) - correct answer ✔Sharing, Transfer, Avoidance, Reduction,
Retention
Contract (policy) - correct answer ✔an agreement between the insured and the insurer
1st party - correct answer ✔Insured (customer)
2nd party - correct answer ✔insurer, insurance company
Law of Large Numbers - correct answer ✔larger the group; the more accurate losses can be predicted
Characteristics of risks that can be insured (CANHAM) - correct answer ✔Calculable, affordable, non-
catastrophic, homogeneous, accidental, measurable
Adverse Selection - correct answer ✔risks that have a greater than average chance of loss
Reinsurance - correct answer ✔an insurance company (the ceding company) paying another insurance
company (reinsurer) to take some of the companies risk of catastrophic loss
Facultative - correct answer ✔the reinsurer evaluates each risk before allowing the transfer
Treaty - correct answer ✔the reinsurer accepts the transfer according to an agreement called a treaty
Stock Insurer - correct answer ✔- publically owned by stockholders/shareholders
- if the company makes money, a taxable dividend from the profits may be paid to the
stockholders/shareholders
, - issues non-par policies
Mutual Insurer - correct answer ✔-Owned by the policyholders (customers)
-If the company is profitable, can return excess premium to its policyholders--nontaxable dividend
-Issues participating policies.
Fraternal Insurer - correct answer ✔-provides insurance and other benefits
-must be a member of the society to get the benefits
Reciprocal Insurer - correct answer ✔-unincorporated
-members are assessed the amount they have to pay if a loss to any member of the group occurs
-run by an attorney-in-fact
Lloyd's Association - correct answer ✔insurance provided by individual underwriters not companies
Risk Retention Group - correct answer ✔Liability insurance company created for policyholders from the
same industry. Example--car dealers RRG--only car dealers can be policyholders
Risk Purchasing Group - correct answer ✔a group of businesses from the same industry joining
together to buy liability insurance from an insurance company. The RPG is NOT the insurance company
Self-insurance - correct answer ✔a business that pays its own claims
Residual Market - correct answer ✔insurance from the state or federal government
Insurance Company Location - correct answer ✔Domestic-state where company is incorporated
Exam Questions with complete
solution 2025/2026
Insurance - correct answer ✔transfer of risk
RIsk - correct answer ✔uncertainty/possibility of a loss
Two types of risk - correct answer ✔Pure and Speculative
Speculative Risk - correct answer ✔chance of loss or gain; not insurable
Pure Risk - correct answer ✔chance of loss only; can be insured
Exposure - correct answer ✔risks for which the insurance company would be liable
Peril - correct answer ✔cause of loss
Hazard (there are 3 types) - correct answer ✔something that causes an increase in the chance of loss
Physical Hazard - correct answer ✔the hazard can be seen
Moral Hazard - correct answer ✔a belief that intentionally causing a loss is acceptable
Morale Hazard - correct answer ✔carelessness
,Methods of Handling Risk (STARR) - correct answer ✔Sharing, Transfer, Avoidance, Reduction,
Retention
Contract (policy) - correct answer ✔an agreement between the insured and the insurer
1st party - correct answer ✔Insured (customer)
2nd party - correct answer ✔insurer, insurance company
Law of Large Numbers - correct answer ✔larger the group; the more accurate losses can be predicted
Characteristics of risks that can be insured (CANHAM) - correct answer ✔Calculable, affordable, non-
catastrophic, homogeneous, accidental, measurable
Adverse Selection - correct answer ✔risks that have a greater than average chance of loss
Reinsurance - correct answer ✔an insurance company (the ceding company) paying another insurance
company (reinsurer) to take some of the companies risk of catastrophic loss
Facultative - correct answer ✔the reinsurer evaluates each risk before allowing the transfer
Treaty - correct answer ✔the reinsurer accepts the transfer according to an agreement called a treaty
Stock Insurer - correct answer ✔- publically owned by stockholders/shareholders
- if the company makes money, a taxable dividend from the profits may be paid to the
stockholders/shareholders
, - issues non-par policies
Mutual Insurer - correct answer ✔-Owned by the policyholders (customers)
-If the company is profitable, can return excess premium to its policyholders--nontaxable dividend
-Issues participating policies.
Fraternal Insurer - correct answer ✔-provides insurance and other benefits
-must be a member of the society to get the benefits
Reciprocal Insurer - correct answer ✔-unincorporated
-members are assessed the amount they have to pay if a loss to any member of the group occurs
-run by an attorney-in-fact
Lloyd's Association - correct answer ✔insurance provided by individual underwriters not companies
Risk Retention Group - correct answer ✔Liability insurance company created for policyholders from the
same industry. Example--car dealers RRG--only car dealers can be policyholders
Risk Purchasing Group - correct answer ✔a group of businesses from the same industry joining
together to buy liability insurance from an insurance company. The RPG is NOT the insurance company
Self-insurance - correct answer ✔a business that pays its own claims
Residual Market - correct answer ✔insurance from the state or federal government
Insurance Company Location - correct answer ✔Domestic-state where company is incorporated
