LOMA 281 Module 1 Exam 2026: Verified
Questions & Correct Answers | Graded A+
Study Guide
,1. Risk is best defined as:
A. A guaranteed loss.
B. The possibility of an unexpected result.
C. A certain gain.
D. A method of avoiding loss.
Answer: B. The possibility of an unexpected result
Rationale: Risk is uncertainty about outcomes, not a
certain loss or gain.
2. Pure risk involves:
A. Only the chance of loss or no loss.
B. Only the chance of gain.
C. Loss, gain, or no change.
D. No uncertainty.
Answer: A. Only the chance of loss or no loss
Rationale: Pure risk has no possibility of gain.
3. Speculative risk involves:
A. Only loss or no loss.
B. Loss, gain, or no change.
C. No chance of loss.
, D. Only insurable events.
Answer: B. Loss, gain, or no change
Rationale: Speculative risk can produce loss, gain, or no
change.
4. Which risk is generally insurable?
A. Speculative risk.
B. Pure risk.
C. Investment risk.
D. Business profit risk.
Answer: B. Pure risk
Rationale: Insurance generally handles pure risk, not
speculative risk.
5. A premium is:
A. The benefit paid at death.
B. The amount charged by an insurer for coverage.
C. A policy reserve.
D. A dividend.
Answer: B. The amount charged by an insurer for
coverage
, Rationale: The premium is the price paid for the insurer’s
promise to pay covered benefits.
6. Insurable interest means:
A. The insurer owns the policy.
B. The policyowner would suffer genuine loss if the insured
event occurs.
C. The beneficiary must be a relative.
D. The insured must be healthy.
Answer: B. The policyowner would suffer genuine loss if
the insured event occurs
Rationale: Insurable interest requires a legitimate financial
or emotional stake.
7. An indemnity contract pays:
A. A fixed amount regardless of loss.
B. Based on the actual financial loss.
C. Only dividends.
D. Only cash value.
Answer: B. Based on the actual financial loss
Rationale: Indemnity contracts reimburse actual loss.
Questions & Correct Answers | Graded A+
Study Guide
,1. Risk is best defined as:
A. A guaranteed loss.
B. The possibility of an unexpected result.
C. A certain gain.
D. A method of avoiding loss.
Answer: B. The possibility of an unexpected result
Rationale: Risk is uncertainty about outcomes, not a
certain loss or gain.
2. Pure risk involves:
A. Only the chance of loss or no loss.
B. Only the chance of gain.
C. Loss, gain, or no change.
D. No uncertainty.
Answer: A. Only the chance of loss or no loss
Rationale: Pure risk has no possibility of gain.
3. Speculative risk involves:
A. Only loss or no loss.
B. Loss, gain, or no change.
C. No chance of loss.
, D. Only insurable events.
Answer: B. Loss, gain, or no change
Rationale: Speculative risk can produce loss, gain, or no
change.
4. Which risk is generally insurable?
A. Speculative risk.
B. Pure risk.
C. Investment risk.
D. Business profit risk.
Answer: B. Pure risk
Rationale: Insurance generally handles pure risk, not
speculative risk.
5. A premium is:
A. The benefit paid at death.
B. The amount charged by an insurer for coverage.
C. A policy reserve.
D. A dividend.
Answer: B. The amount charged by an insurer for
coverage
, Rationale: The premium is the price paid for the insurer’s
promise to pay covered benefits.
6. Insurable interest means:
A. The insurer owns the policy.
B. The policyowner would suffer genuine loss if the insured
event occurs.
C. The beneficiary must be a relative.
D. The insured must be healthy.
Answer: B. The policyowner would suffer genuine loss if
the insured event occurs
Rationale: Insurable interest requires a legitimate financial
or emotional stake.
7. An indemnity contract pays:
A. A fixed amount regardless of loss.
B. Based on the actual financial loss.
C. Only dividends.
D. Only cash value.
Answer: B. Based on the actual financial loss
Rationale: Indemnity contracts reimburse actual loss.
