Oklahoma Life & Health Insurance
Practice Test Chapter 1 Questions And
Answers 2026/2027 Updated.
Judith is injured in a car accident. She incurs a covered loss of $50,000. She is required to pay
$3,000 before the insurer will cover 80% of the covered loss. Which of the following terms best
describes the $3,000 Judith must pay?
a. Premium
b. Deductible
c. Coinsurance
d. Claim - Answer B. Deductible
Reinsurance is defined as:
Select one:
a. Risk reduction
b. Spreading risk from one insurer to another
c. To make whole
d. Adverse selection - Answer B. Spreading risk from one insurer to another
Which of the following is the consideration an insured pays for insurance coverage?
Select one:
a. Deductible
b. Premium
c. Limit of liability
d. Coinsurance - Answer B. Premium
In life and health insurance, a person's greatest asset is:
Select one:
a. Their earning power
b. Risk pooling
c. The law of large numbers
d. Insurance - Answer A. Their earning power
Which of the following correctly describes the law of large numbers?
Select one:
,a. It states that an insurer taking on too many risks will incur catastrophic losses.
b. It states that as a group's size increases, it is easier to predict the number of future losses
over a specific time period.
c. It states that poorer than average risks usually seek out insurance.
d. It predicts losses. - Answer B. It states that as a group's size increases, it is easier to predict
the number of future losses over a specific time period.
Transferring uncertainty of loss to the insurance company is the definition of:
Select one:
a. Risk pooling
b. The law of large numbers
c. Insurance
d. None of the above - Answer C. Insurance
Stock insurers are also called:
Select one:
a. Government insurers
b. Participating
c. Service providers
d. Nonparticipating - Answer D. Nonparticipating
An alien insurer is:
Select one:
a. An insurance company conducting business in a foreign country
b. An insurance company conducting business in the state in which it is incorporated
c. An insurance company conducting business in a state in which it wasn't incorporated
d. Always unauthorized - Answer A. An insurance company conducting business in a foreign
country
Mutual insurers pay dividends to:
Select one:
a. Policy owners
b. Board of Directors
c. Shareholders
d. They don't pay dividends. - Answer A. Policy owners
, A foreign insurer is:
Select one:
a. An insurance company conducting business in a foreign country
b. An insurance company conducting business in the state in which it is incorporated
c. An insurance company conducting business in a state in which it wasn't incorporated
d. Always unauthorized - Answer C. An insurance company conducting business in a state in
which it wasn't incorporated
A domestic insurer is:
Select one:
a. An insurance company conducting business in a foreign country
b. An insurance company conducting business in the state in which it is incorporated
c. An insurance company conducting business in a state in which it wasn't incorporated
d. Always unauthorized - Answer B. An insurance company conducting business in the state in
which it is incorporated
Mutual insurers are also called:
Select one:
a. Service providers
b. Participating
c. Nonparticipating
d. Government insurers - Answer B. Participating
LMO Insurer is incorporated in New Hampshire, conducts business in all of the eastern seaboard
states and in Germany. How is LMO Insurer classified in Germany?
Select one:
a. Excess and surplus lines
b. Alien
c. Foreign
d. Domestic - Answer B. Alien
Stock insurers pay dividends to:
Select one:
a. Shareholders
b. They don't pay dividends.
c. Board of Directors
Practice Test Chapter 1 Questions And
Answers 2026/2027 Updated.
Judith is injured in a car accident. She incurs a covered loss of $50,000. She is required to pay
$3,000 before the insurer will cover 80% of the covered loss. Which of the following terms best
describes the $3,000 Judith must pay?
a. Premium
b. Deductible
c. Coinsurance
d. Claim - Answer B. Deductible
Reinsurance is defined as:
Select one:
a. Risk reduction
b. Spreading risk from one insurer to another
c. To make whole
d. Adverse selection - Answer B. Spreading risk from one insurer to another
Which of the following is the consideration an insured pays for insurance coverage?
Select one:
a. Deductible
b. Premium
c. Limit of liability
d. Coinsurance - Answer B. Premium
In life and health insurance, a person's greatest asset is:
Select one:
a. Their earning power
b. Risk pooling
c. The law of large numbers
d. Insurance - Answer A. Their earning power
Which of the following correctly describes the law of large numbers?
Select one:
,a. It states that an insurer taking on too many risks will incur catastrophic losses.
b. It states that as a group's size increases, it is easier to predict the number of future losses
over a specific time period.
c. It states that poorer than average risks usually seek out insurance.
d. It predicts losses. - Answer B. It states that as a group's size increases, it is easier to predict
the number of future losses over a specific time period.
Transferring uncertainty of loss to the insurance company is the definition of:
Select one:
a. Risk pooling
b. The law of large numbers
c. Insurance
d. None of the above - Answer C. Insurance
Stock insurers are also called:
Select one:
a. Government insurers
b. Participating
c. Service providers
d. Nonparticipating - Answer D. Nonparticipating
An alien insurer is:
Select one:
a. An insurance company conducting business in a foreign country
b. An insurance company conducting business in the state in which it is incorporated
c. An insurance company conducting business in a state in which it wasn't incorporated
d. Always unauthorized - Answer A. An insurance company conducting business in a foreign
country
Mutual insurers pay dividends to:
Select one:
a. Policy owners
b. Board of Directors
c. Shareholders
d. They don't pay dividends. - Answer A. Policy owners
, A foreign insurer is:
Select one:
a. An insurance company conducting business in a foreign country
b. An insurance company conducting business in the state in which it is incorporated
c. An insurance company conducting business in a state in which it wasn't incorporated
d. Always unauthorized - Answer C. An insurance company conducting business in a state in
which it wasn't incorporated
A domestic insurer is:
Select one:
a. An insurance company conducting business in a foreign country
b. An insurance company conducting business in the state in which it is incorporated
c. An insurance company conducting business in a state in which it wasn't incorporated
d. Always unauthorized - Answer B. An insurance company conducting business in the state in
which it is incorporated
Mutual insurers are also called:
Select one:
a. Service providers
b. Participating
c. Nonparticipating
d. Government insurers - Answer B. Participating
LMO Insurer is incorporated in New Hampshire, conducts business in all of the eastern seaboard
states and in Germany. How is LMO Insurer classified in Germany?
Select one:
a. Excess and surplus lines
b. Alien
c. Foreign
d. Domestic - Answer B. Alien
Stock insurers pay dividends to:
Select one:
a. Shareholders
b. They don't pay dividends.
c. Board of Directors
