Primerica Life Insurance State Exam 2026
Question and Answer | Updated Review from
Previously Tested Questions | Grade A+
• Following a career change, an insured is no longer required to perform many
physical activities, so he has implemented a program where he walks and jogs for
45 minutes each morning. The insured has also eliminated most fatty foods from
his diet. Which method of dealing with risk does this scenario describe?
a. retention
b. reduction
c. transfer
d. avoidance -✓✓B. reduction
the insured's change in lifestyle and habits would likely reduce the chances of
health problems
• In insurance, an offer is usually made when
a. an applicant submits an application to the insurer
b. the insurer approves the application and receives the initial premium
c. the agent hands the policy to the policyholder
d. an agent explains a policy to a potential applicant -✓✓A. an applicant submits
an application to the insurer
in insurance, the offer is usually made by the applicant in the form of an
application. acceptance takes place when an insurer's underwriter approves the
application and issues a policy
,• the causes of loss insured against in an insurance policy are known as
a. perils
b. losses
c. risks
d. hazards -✓✓A. perils
perils are the causes of loss insured against in an insurance policy
• what documentation grants express authority to an agent?
a. agents contract with the principal
b. agents insurance license
c. fiduciary contract
d. state provisions -✓✓A. agents contract with the principal
the principal grants authority to an agent through the agent's contract
• which of the following best describes an insurance company that has been formed
under the laws of this state?
a. domestic
b. sovereign
c. alien
,d. foreign -✓✓A. domestic
a company is domestic when doing business within the state in which it is
incorporated
• which of the following factors is NOT considered by an underwriter when
determining the premium rates for an individual seeking insurance?
a. medical history
b. sex
c. age
d. race -✓✓D. race
age, medical history, and sex provide sound statistical date for determining the
probability of loss. Race, religion, sexual orientation, etc. are the factors that
cannot be used because there is not sound statistical data to show that they effect
the probability of loss; therefore, they are considered to be discriminatory
• in insurance transactions, fiduciary responsibility means
a. handling insurer funds in a trust capacity
b. maintaining good credit record
c. being liable with respect to payment of claims
d. commingling premiums with agents personal funds -✓✓A. handling insurer
funds in a trust capacity
, an agents fiduciary responsibility includes handling insurer funds in a trust
capacity
• the authority granted to an agent through the agent's contract is referred to as
a. absolute authority
b. express authority
c. apparent authority
d. implied authority -✓✓B. express authority
express powers are written into the contract between the insurer and the agent
• insurance policies are not drawn up though negotiations, and an insured has little
to say about its provisions. what contract characteristic does this describe?
a. unilateral
b. conditional
c. personal
d. adhesion -✓✓D. adhesion
a contract of adhesion is prepared by only the insurer; the insured's only option is
to accept or reject the policy as its written
• which of the following insurers are owned by stockholders who have the usual
rights of ownership, including the right of voting?
Question and Answer | Updated Review from
Previously Tested Questions | Grade A+
• Following a career change, an insured is no longer required to perform many
physical activities, so he has implemented a program where he walks and jogs for
45 minutes each morning. The insured has also eliminated most fatty foods from
his diet. Which method of dealing with risk does this scenario describe?
a. retention
b. reduction
c. transfer
d. avoidance -✓✓B. reduction
the insured's change in lifestyle and habits would likely reduce the chances of
health problems
• In insurance, an offer is usually made when
a. an applicant submits an application to the insurer
b. the insurer approves the application and receives the initial premium
c. the agent hands the policy to the policyholder
d. an agent explains a policy to a potential applicant -✓✓A. an applicant submits
an application to the insurer
in insurance, the offer is usually made by the applicant in the form of an
application. acceptance takes place when an insurer's underwriter approves the
application and issues a policy
,• the causes of loss insured against in an insurance policy are known as
a. perils
b. losses
c. risks
d. hazards -✓✓A. perils
perils are the causes of loss insured against in an insurance policy
• what documentation grants express authority to an agent?
a. agents contract with the principal
b. agents insurance license
c. fiduciary contract
d. state provisions -✓✓A. agents contract with the principal
the principal grants authority to an agent through the agent's contract
• which of the following best describes an insurance company that has been formed
under the laws of this state?
a. domestic
b. sovereign
c. alien
,d. foreign -✓✓A. domestic
a company is domestic when doing business within the state in which it is
incorporated
• which of the following factors is NOT considered by an underwriter when
determining the premium rates for an individual seeking insurance?
a. medical history
b. sex
c. age
d. race -✓✓D. race
age, medical history, and sex provide sound statistical date for determining the
probability of loss. Race, religion, sexual orientation, etc. are the factors that
cannot be used because there is not sound statistical data to show that they effect
the probability of loss; therefore, they are considered to be discriminatory
• in insurance transactions, fiduciary responsibility means
a. handling insurer funds in a trust capacity
b. maintaining good credit record
c. being liable with respect to payment of claims
d. commingling premiums with agents personal funds -✓✓A. handling insurer
funds in a trust capacity
, an agents fiduciary responsibility includes handling insurer funds in a trust
capacity
• the authority granted to an agent through the agent's contract is referred to as
a. absolute authority
b. express authority
c. apparent authority
d. implied authority -✓✓B. express authority
express powers are written into the contract between the insurer and the agent
• insurance policies are not drawn up though negotiations, and an insured has little
to say about its provisions. what contract characteristic does this describe?
a. unilateral
b. conditional
c. personal
d. adhesion -✓✓D. adhesion
a contract of adhesion is prepared by only the insurer; the insured's only option is
to accept or reject the policy as its written
• which of the following insurers are owned by stockholders who have the usual
rights of ownership, including the right of voting?
