Life, Health & Accident Insurance Examination Practice
Questions with Answers and Rationales
1. Risk in insurance refers to:
A. Certain loss
B. Chance of loss
C. Profit guarantee
D. Investment return
Answer: B
Rationale: Risk is the uncertainty or chance that a loss may occur.
2. Insurable interest must exist:
A. At claim time
B. At policy inception
C. After death
D. After renewal
Answer: B
Rationale: The insured must suffer financial loss at the start of the policy.
3. Principle requiring honesty from both parties:
A. Indemnity
B. Utmost good faith
C. Subrogation
D. Contribution
Answer: B
Rationale: Insurance depends on full disclosure of material facts.
4. Term life insurance provides:
A. Lifetime cover
B. Investment income
C. Cover for a fixed period
,D. Medical cover
Answer: C
Rationale: Term life only covers death within a specific period.
5. Whole life insurance pays benefits:
A. Only at maturity
B. Only on death
C. Only on illness
D. Never
Answer: B
Rationale: It pays death benefit whenever the insured dies.
6. Indemnity means:
A. Profit from insurance
B. Restoration to original financial position
C. Double compensation
D. Premium refund
Answer: B
7. Subrogation allows insurer to:
A. Increase premiums
B. Take insured’s legal rights after payment
C. Cancel policy
D. Delay claims
Answer: B
8. Contribution applies when:
A. One insurer covers loss
B. Multiple insurers cover same risk
C. No insurance exists
D. Policy expires
Answer: B
, 9. Accident insurance covers:
A. Natural death only
B. Illness only
C. Accidental injury or death
D. Retirement
Answer: C
10. Health insurance mainly covers:
A. Property loss
B. Medical expenses
C. Car damage
D. Loans
Answer: B
11. Grace period means:
A. Policy cancellation time
B. Extra time to pay premium
C. Claim rejection period
D. Policy maturity
Answer: B
12. Waiting period is:
A. Time before benefits start
B. Time after claim is paid
C. Time after policy ends
D. Renewal time
Answer: A
13. A hazard is:
A. Guaranteed loss
B. Condition increasing risk
C. Insurance policy
Questions with Answers and Rationales
1. Risk in insurance refers to:
A. Certain loss
B. Chance of loss
C. Profit guarantee
D. Investment return
Answer: B
Rationale: Risk is the uncertainty or chance that a loss may occur.
2. Insurable interest must exist:
A. At claim time
B. At policy inception
C. After death
D. After renewal
Answer: B
Rationale: The insured must suffer financial loss at the start of the policy.
3. Principle requiring honesty from both parties:
A. Indemnity
B. Utmost good faith
C. Subrogation
D. Contribution
Answer: B
Rationale: Insurance depends on full disclosure of material facts.
4. Term life insurance provides:
A. Lifetime cover
B. Investment income
C. Cover for a fixed period
,D. Medical cover
Answer: C
Rationale: Term life only covers death within a specific period.
5. Whole life insurance pays benefits:
A. Only at maturity
B. Only on death
C. Only on illness
D. Never
Answer: B
Rationale: It pays death benefit whenever the insured dies.
6. Indemnity means:
A. Profit from insurance
B. Restoration to original financial position
C. Double compensation
D. Premium refund
Answer: B
7. Subrogation allows insurer to:
A. Increase premiums
B. Take insured’s legal rights after payment
C. Cancel policy
D. Delay claims
Answer: B
8. Contribution applies when:
A. One insurer covers loss
B. Multiple insurers cover same risk
C. No insurance exists
D. Policy expires
Answer: B
, 9. Accident insurance covers:
A. Natural death only
B. Illness only
C. Accidental injury or death
D. Retirement
Answer: C
10. Health insurance mainly covers:
A. Property loss
B. Medical expenses
C. Car damage
D. Loans
Answer: B
11. Grace period means:
A. Policy cancellation time
B. Extra time to pay premium
C. Claim rejection period
D. Policy maturity
Answer: B
12. Waiting period is:
A. Time before benefits start
B. Time after claim is paid
C. Time after policy ends
D. Renewal time
Answer: A
13. A hazard is:
A. Guaranteed loss
B. Condition increasing risk
C. Insurance policy
