LIFE, ACCIDENT & SICKNESS AGENT (12-GA-05) CERTIFICATION |
COMPLETE EXAM 2026/2027 | QUESTIONS AND 100% VERIFIED
ANSWERS | PASS GUARANTEE
Life, Accident & Sickness Agent (12-GA-05) Certification
1. What is the primary purpose of insurance? A) To create investment
opportunities B) To transfer risk from an individual to an insurer C) To
guarantee profits for insurance companies D) To eliminate all risks ANSWER :
B
2. Which of the following best describes the law of large numbers? A) The
more policies an insurer writes, the more predictable losses become B) Large
insurance companies always make larger profits C) Large numbers of claims
result in higher premiums D) Insurance is only available to large groups
ANSWER : A
3. What is the definition of "risk" in insurance? A) The certainty of loss B) The
uncertainty of loss C) The amount of premium paid D) The deductible amount
ANSWER : B
4. Which of the following is an example of a pure risk? A) Investing in the
stock market B) Gambling at a casino C) The possibility of a house fire D)
Starting a new business ANSWER : C
5. What is the difference between pure risk and speculative risk? A) Pure risk
involves only financial loss, while speculative risk involves only physical loss B)
Pure risk involves the chance of loss or no loss, while speculative risk involves
the chance of loss, no loss, or gain C) Pure risk is insurable, speculative risk is
never insurable D) There is no difference ANSWER : B
6. What is "hazard" in insurance terminology? A) A condition that increases
the probability or severity of a loss B) The same as a peril C) The amount of the
deductible D) A type of insurance policy ANSWER : A
,7. Which of the following is an example of a moral hazard? A) A person who
smokes and applies for life insurance B) A person who intentionally sets fire to
their own home to collect insurance proceeds C) A person who lives in a flood
zone D) A person who drives a fast car ANSWER : B
8. What is a "peril"? A) The cause of a loss B) The result of a loss C) The
amount of insurance coverage D) The insurance premium ANSWER : A
9. Which of the following is NOT one of the elements of an insurable risk? A)
The loss must be accidental B) The loss must be catastrophic C) The loss must
be measurable D) The loss must be predictable ANSWER : B
10. What is "indemnity" in insurance? A) A type of life insurance policy B) The
principle that the insured should be restored to the same financial position
after a loss as before the loss C) The amount of profit an insurer makes D) A
type of insurance agent license ANSWER : B
11. Which principle states that the insured cannot profit from insurance? A)
Principle of utmost good faith B) Principle of indemnity C) Principle of insurable
interest D) Principle of subrogation ANSWER : B
12. What is "insurable interest"? A) The interest an insurer has in selling
policies B) The financial interest a person has in the subject matter of
insurance C) The interest rate charged on insurance loans D) The commission
an agent earns ANSWER : B
13. In life insurance, when must insurable interest exist? A) Only at the time
of the loss B) Only at the inception of the policy C) Throughout the entire policy
term D) At both inception and at the time of loss ANSWER : B
14. What is the principle of "utmost good faith"? A) The insured must always
pay premiums on time B) Both parties to an insurance contract must disclose
all material facts C) The insurer must always pay claims immediately D) The
agent must always earn the highest commission ANSWER : B
15. What is a "material fact" in insurance? A) A fact that is written in the
policy B) A fact that would influence the insurer's decision to accept or reject a
risk C) A fact that is known only to the agent D) A fact that is irrelevant to the
risk ANSWER : B
16. What is the difference between a "warranty" and a "representation"? A)
A warranty is a statement guaranteed to be true, while a representation is a
statement believed to be true B) There is no difference C) A warranty is oral,
,while a representation is written D) A warranty applies only to life insurance
ANSWER : A
17. What is "concealment" in insurance? A) Hiding a material fact from the
insurer B) A type of insurance policy C) The cancellation of a policy D) The
renewal of a policy ANSWER : A
18. What is "waiver" in insurance? A) The intentional relinquishment of a
known right B) The automatic renewal of a policy C) The cancellation of a
policy by the insured D) A type of insurance rider ANSWER : A
19. What is "estoppel"? A) A legal principle preventing a party from denying a
fact they previously acknowledged B) A type of insurance policy C) The process
of underwriting D) The payment of a claim ANSWER : A
20. What is "subrogation"? A) The substitution of the insurer in place of the
insured to pursue recovery from a third party B) The cancellation of a policy C)
The renewal of a policy D) A type of insurance rider ANSWER : A
21. What is "proximate cause"? A) The direct cause of a loss B) The nearest
insurance office C) The amount of the premium D) The deductible amount
ANSWER : A
22. Which of the following is an example of a physical hazard? A) A person
with a dishonest character B) A building with faulty wiring C) A person who
drives recklessly D) A person who lies on an application ANSWER : B
23. Which of the following is an example of a morale hazard? A) A building
located in a flood zone B) A person who is careless because they know they are
insured C) A person with a pre-existing medical condition D) A car with faulty
brakes ANSWER : B
24. What is "adverse selection"? A) The tendency of persons with a higher-
than-average chance of loss to seek insurance at standard rates B) The
selection of the best insurance policies C) The process of underwriting D) The
cancellation of policies ANSWER : A
25. What is "reinsurance"? A) Insurance purchased by an insurer from another
insurer B) Insurance purchased by an insured from multiple insurers C) The
renewal of an insurance policy D) The cancellation of an insurance policy
ANSWER : A
, 26. What is a "stock insurance company"? A) An insurance company owned by
its policyholders B) An insurance company owned by its stockholders C) A
mutual insurance company D) A fraternal benefit society ANSWER : B
27. What is a "mutual insurance company"? A) An insurance company owned
by its stockholders B) An insurance company owned by its policyholders C) A
stock insurance company D) A reciprocal exchange ANSWER : B
28. What is a "fraternal benefit society"? A) A for-profit insurance company B)
A nonprofit organization that provides insurance benefits to its members C) A
stock insurance company D) A reinsurance company ANSWER : B
29. What is a "reciprocal exchange"? A) An unincorporated organization in
which members agree to insure each other B) A stock insurance company C) A
mutual insurance company D) A fraternal benefit society ANSWER : A
30. What is a "Lloyd's organization"? A) A group of underwriters who join
together to insure risks B) A type of mutual insurance company C) A
government insurance program D) A fraternal benefit society ANSWER : A
31. What is "surplus lines insurance"? A) Insurance placed with nonadmitted
insurers when coverage is unavailable from admitted insurers B) Extra
insurance coverage C) Insurance for surplus goods D) A type of life insurance
ANSWER : A
32. What is an "admitted insurer"? A) An insurer not licensed to do business in
a state B) An insurer licensed to do business in a state C) A foreign insurer D)
An alien insurer ANSWER : B
33. What is a "domestic insurer"? A) An insurer incorporated in another state
B) An insurer incorporated in a foreign country C) An insurer incorporated in
the state where it is doing business D) An insurer that only sells online
ANSWER : C
34. What is a "foreign insurer"? A) An insurer from another country B) An
insurer incorporated in another state but doing business in the state in
question C) An insurer that only sells internationally D) An insurer that is not
licensed ANSWER : B
35. What is an "alien insurer"? A) An insurer from another planet B) An insurer
incorporated in a foreign country C) An insurer that is not licensed D) A
domestic insurer ANSWER : B
COMPLETE EXAM 2026/2027 | QUESTIONS AND 100% VERIFIED
ANSWERS | PASS GUARANTEE
Life, Accident & Sickness Agent (12-GA-05) Certification
1. What is the primary purpose of insurance? A) To create investment
opportunities B) To transfer risk from an individual to an insurer C) To
guarantee profits for insurance companies D) To eliminate all risks ANSWER :
B
2. Which of the following best describes the law of large numbers? A) The
more policies an insurer writes, the more predictable losses become B) Large
insurance companies always make larger profits C) Large numbers of claims
result in higher premiums D) Insurance is only available to large groups
ANSWER : A
3. What is the definition of "risk" in insurance? A) The certainty of loss B) The
uncertainty of loss C) The amount of premium paid D) The deductible amount
ANSWER : B
4. Which of the following is an example of a pure risk? A) Investing in the
stock market B) Gambling at a casino C) The possibility of a house fire D)
Starting a new business ANSWER : C
5. What is the difference between pure risk and speculative risk? A) Pure risk
involves only financial loss, while speculative risk involves only physical loss B)
Pure risk involves the chance of loss or no loss, while speculative risk involves
the chance of loss, no loss, or gain C) Pure risk is insurable, speculative risk is
never insurable D) There is no difference ANSWER : B
6. What is "hazard" in insurance terminology? A) A condition that increases
the probability or severity of a loss B) The same as a peril C) The amount of the
deductible D) A type of insurance policy ANSWER : A
,7. Which of the following is an example of a moral hazard? A) A person who
smokes and applies for life insurance B) A person who intentionally sets fire to
their own home to collect insurance proceeds C) A person who lives in a flood
zone D) A person who drives a fast car ANSWER : B
8. What is a "peril"? A) The cause of a loss B) The result of a loss C) The
amount of insurance coverage D) The insurance premium ANSWER : A
9. Which of the following is NOT one of the elements of an insurable risk? A)
The loss must be accidental B) The loss must be catastrophic C) The loss must
be measurable D) The loss must be predictable ANSWER : B
10. What is "indemnity" in insurance? A) A type of life insurance policy B) The
principle that the insured should be restored to the same financial position
after a loss as before the loss C) The amount of profit an insurer makes D) A
type of insurance agent license ANSWER : B
11. Which principle states that the insured cannot profit from insurance? A)
Principle of utmost good faith B) Principle of indemnity C) Principle of insurable
interest D) Principle of subrogation ANSWER : B
12. What is "insurable interest"? A) The interest an insurer has in selling
policies B) The financial interest a person has in the subject matter of
insurance C) The interest rate charged on insurance loans D) The commission
an agent earns ANSWER : B
13. In life insurance, when must insurable interest exist? A) Only at the time
of the loss B) Only at the inception of the policy C) Throughout the entire policy
term D) At both inception and at the time of loss ANSWER : B
14. What is the principle of "utmost good faith"? A) The insured must always
pay premiums on time B) Both parties to an insurance contract must disclose
all material facts C) The insurer must always pay claims immediately D) The
agent must always earn the highest commission ANSWER : B
15. What is a "material fact" in insurance? A) A fact that is written in the
policy B) A fact that would influence the insurer's decision to accept or reject a
risk C) A fact that is known only to the agent D) A fact that is irrelevant to the
risk ANSWER : B
16. What is the difference between a "warranty" and a "representation"? A)
A warranty is a statement guaranteed to be true, while a representation is a
statement believed to be true B) There is no difference C) A warranty is oral,
,while a representation is written D) A warranty applies only to life insurance
ANSWER : A
17. What is "concealment" in insurance? A) Hiding a material fact from the
insurer B) A type of insurance policy C) The cancellation of a policy D) The
renewal of a policy ANSWER : A
18. What is "waiver" in insurance? A) The intentional relinquishment of a
known right B) The automatic renewal of a policy C) The cancellation of a
policy by the insured D) A type of insurance rider ANSWER : A
19. What is "estoppel"? A) A legal principle preventing a party from denying a
fact they previously acknowledged B) A type of insurance policy C) The process
of underwriting D) The payment of a claim ANSWER : A
20. What is "subrogation"? A) The substitution of the insurer in place of the
insured to pursue recovery from a third party B) The cancellation of a policy C)
The renewal of a policy D) A type of insurance rider ANSWER : A
21. What is "proximate cause"? A) The direct cause of a loss B) The nearest
insurance office C) The amount of the premium D) The deductible amount
ANSWER : A
22. Which of the following is an example of a physical hazard? A) A person
with a dishonest character B) A building with faulty wiring C) A person who
drives recklessly D) A person who lies on an application ANSWER : B
23. Which of the following is an example of a morale hazard? A) A building
located in a flood zone B) A person who is careless because they know they are
insured C) A person with a pre-existing medical condition D) A car with faulty
brakes ANSWER : B
24. What is "adverse selection"? A) The tendency of persons with a higher-
than-average chance of loss to seek insurance at standard rates B) The
selection of the best insurance policies C) The process of underwriting D) The
cancellation of policies ANSWER : A
25. What is "reinsurance"? A) Insurance purchased by an insurer from another
insurer B) Insurance purchased by an insured from multiple insurers C) The
renewal of an insurance policy D) The cancellation of an insurance policy
ANSWER : A
, 26. What is a "stock insurance company"? A) An insurance company owned by
its policyholders B) An insurance company owned by its stockholders C) A
mutual insurance company D) A fraternal benefit society ANSWER : B
27. What is a "mutual insurance company"? A) An insurance company owned
by its stockholders B) An insurance company owned by its policyholders C) A
stock insurance company D) A reciprocal exchange ANSWER : B
28. What is a "fraternal benefit society"? A) A for-profit insurance company B)
A nonprofit organization that provides insurance benefits to its members C) A
stock insurance company D) A reinsurance company ANSWER : B
29. What is a "reciprocal exchange"? A) An unincorporated organization in
which members agree to insure each other B) A stock insurance company C) A
mutual insurance company D) A fraternal benefit society ANSWER : A
30. What is a "Lloyd's organization"? A) A group of underwriters who join
together to insure risks B) A type of mutual insurance company C) A
government insurance program D) A fraternal benefit society ANSWER : A
31. What is "surplus lines insurance"? A) Insurance placed with nonadmitted
insurers when coverage is unavailable from admitted insurers B) Extra
insurance coverage C) Insurance for surplus goods D) A type of life insurance
ANSWER : A
32. What is an "admitted insurer"? A) An insurer not licensed to do business in
a state B) An insurer licensed to do business in a state C) A foreign insurer D)
An alien insurer ANSWER : B
33. What is a "domestic insurer"? A) An insurer incorporated in another state
B) An insurer incorporated in a foreign country C) An insurer incorporated in
the state where it is doing business D) An insurer that only sells online
ANSWER : C
34. What is a "foreign insurer"? A) An insurer from another country B) An
insurer incorporated in another state but doing business in the state in
question C) An insurer that only sells internationally D) An insurer that is not
licensed ANSWER : B
35. What is an "alien insurer"? A) An insurer from another planet B) An insurer
incorporated in a foreign country C) An insurer that is not licensed D) A
domestic insurer ANSWER : B
