PRIMERICA PRACTICE EXAM TEST A 75 CORE
INSURANCE AND INVESTMENT FUNDAMENTALS
REVIEW 2026
◉ 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.
Answer: 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?
a. reciprocal
b. fraternal
,c. stock
d. mutual.
Answer: C. stock
only stock insurance companies are owned and controlled by
stockholders
◉ which of the following best describes the concept that the insured
pays a small amount of premium for a large amount of risk on the
part of the insurance company?
a. subrogation
b. warranty
c. aleatory
d. adhesion.
Answer: C. aleatory
an insurance contract is an aleatory contract in that it requires a
relatively small amount of premium for a large risk
◉ When an insured makes truthful statements on the application for
insurance and pays the required premium, it is known as which of
the following?
,a. legal purpose
b. contract of adhesion
c. acceptance
d. consideration.
Answer: D. consideration
consideration is something of value that each party gives to the
other. The consideration on the part of the insured is the payment of
premium and the representations made in the application
◉ which of the following would qualify as a competent party in an
insurance contract?
a. the applicant is intoxicated at the time of application
b. the applicant is 12 year old student
c. the applicant is under the influence of a mind-impairing
medication at the time of application
d. the applicant has a prior felony conviction.
Answer: D. the applicant has a prior felony conviction
when an insurer and insured enter into a contract, both parties must
be legal of age and mentally competent. It is legal for a person
, convicted of a felony to buy an insurance contract. An intoxicated
person, however, may not be mentally competent, a 12 year old
student is considered to be underage in most states and a person
under mind-impairing medication most likely would not be mentally
competent
◉ an insurer neglects to pay a legitimate claim that is covered under
the terms of the policy. Which of the following insurance principles
has the insurer violated?
a. representation
b. adhesion
c. consideration
d. good health.
Answer: C. consideration
the binding force in any contract is consideration. consideration on
the part of the insureds the payment of premiums and the health
representations made in the application. Consideration on the part
of the insurer is the promise to pay in the even of loss
◉ which of the following is a primary source of information used for
insurance underwriting?
INSURANCE AND INVESTMENT FUNDAMENTALS
REVIEW 2026
◉ 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.
Answer: 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?
a. reciprocal
b. fraternal
,c. stock
d. mutual.
Answer: C. stock
only stock insurance companies are owned and controlled by
stockholders
◉ which of the following best describes the concept that the insured
pays a small amount of premium for a large amount of risk on the
part of the insurance company?
a. subrogation
b. warranty
c. aleatory
d. adhesion.
Answer: C. aleatory
an insurance contract is an aleatory contract in that it requires a
relatively small amount of premium for a large risk
◉ When an insured makes truthful statements on the application for
insurance and pays the required premium, it is known as which of
the following?
,a. legal purpose
b. contract of adhesion
c. acceptance
d. consideration.
Answer: D. consideration
consideration is something of value that each party gives to the
other. The consideration on the part of the insured is the payment of
premium and the representations made in the application
◉ which of the following would qualify as a competent party in an
insurance contract?
a. the applicant is intoxicated at the time of application
b. the applicant is 12 year old student
c. the applicant is under the influence of a mind-impairing
medication at the time of application
d. the applicant has a prior felony conviction.
Answer: D. the applicant has a prior felony conviction
when an insurer and insured enter into a contract, both parties must
be legal of age and mentally competent. It is legal for a person
, convicted of a felony to buy an insurance contract. An intoxicated
person, however, may not be mentally competent, a 12 year old
student is considered to be underage in most states and a person
under mind-impairing medication most likely would not be mentally
competent
◉ an insurer neglects to pay a legitimate claim that is covered under
the terms of the policy. Which of the following insurance principles
has the insurer violated?
a. representation
b. adhesion
c. consideration
d. good health.
Answer: C. consideration
the binding force in any contract is consideration. consideration on
the part of the insureds the payment of premiums and the health
representations made in the application. Consideration on the part
of the insurer is the promise to pay in the even of loss
◉ which of the following is a primary source of information used for
insurance underwriting?
