PA Life, Accident, & Health Insurance Exam Prep Questions And Answers
(202472025)
Insurance - ✔✔defined as the transfer of PURE risk to the insurance company in
consideration for a premium.
The chance of loss without any chance of gain is called - ✔✔pure risk
Speculative risk - ✔✔has the possibility for gain or loss and is not insurable.
Risk is defined as the - ✔✔chance of loss.
A condition that could result in a loss is known as an - ✔✔exposure
A hazard is something that increases - ✔✔the chance of loss.
The presence of a physical hazard - ✔✔increases the chance of a loss occurring.
A peril is - ✔✔defined as a cause of loss, such as fire.
To be insurable, - ✔✔losses must be calculable.
The law of large numbers - ✔✔allows insurers to predict claims more accurately.
The law of large numbers applies to - ✔✔groups of people, not to individuals.
The more people in the group, - ✔✔the more accurate the predictions are.
,Most insurers buy reinsurance - ✔✔to protect themselves in the event of a
catastrophic loss.
Insurance laws are not required - ✔✔to be uniform from one state to another.
A stock insurer - ✔✔may pay dividends to its shareholders (stockholders), but they
may not be guaranteed.
A reciprocal insurance company is managed by an - ✔✔attorney-in-fact.
An unincorporated association of individuals who insure each other is known as -
✔✔a reciprocal insurer.
The government offers insurance primarily based upon - ✔✔social needs, such as
flood insurance and workers compensation, but does not offer insurance for the
purpose of preventing fraud.
A foreign company - ✔✔has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - ✔✔an alien
company.
A producer may be personally liable when - ✔✔violating the producer's contract.
Producers represent - ✔✔the insurance company, not the insured.
, Independent producers - ✔✔own their own accounts and are not insurance company
employees.
Producers have - ✔✔express, implied and apparent authority.
The authority a producer - ✔✔has that is written in his or her contract is known as
express authority.
A producer's binding authority (if any) - ✔✔is expressed (written down) in the
producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - ✔✔but is actual authority the
producer has to transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - ✔✔by the acronym C-O-A-
L (consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - ✔✔is offer and acceptance, or mutual
agreement.
Advertising the availability of insurance is not - ✔✔considered to be an offer.
A specific and definite proposal to enter into a contract is known as - ✔✔an offer.
The consideration on a policy need - ✔✔not be equal.
A policy may not be voided - ✔✔due to unequal consideration.
(202472025)
Insurance - ✔✔defined as the transfer of PURE risk to the insurance company in
consideration for a premium.
The chance of loss without any chance of gain is called - ✔✔pure risk
Speculative risk - ✔✔has the possibility for gain or loss and is not insurable.
Risk is defined as the - ✔✔chance of loss.
A condition that could result in a loss is known as an - ✔✔exposure
A hazard is something that increases - ✔✔the chance of loss.
The presence of a physical hazard - ✔✔increases the chance of a loss occurring.
A peril is - ✔✔defined as a cause of loss, such as fire.
To be insurable, - ✔✔losses must be calculable.
The law of large numbers - ✔✔allows insurers to predict claims more accurately.
The law of large numbers applies to - ✔✔groups of people, not to individuals.
The more people in the group, - ✔✔the more accurate the predictions are.
,Most insurers buy reinsurance - ✔✔to protect themselves in the event of a
catastrophic loss.
Insurance laws are not required - ✔✔to be uniform from one state to another.
A stock insurer - ✔✔may pay dividends to its shareholders (stockholders), but they
may not be guaranteed.
A reciprocal insurance company is managed by an - ✔✔attorney-in-fact.
An unincorporated association of individuals who insure each other is known as -
✔✔a reciprocal insurer.
The government offers insurance primarily based upon - ✔✔social needs, such as
flood insurance and workers compensation, but does not offer insurance for the
purpose of preventing fraud.
A foreign company - ✔✔has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - ✔✔an alien
company.
A producer may be personally liable when - ✔✔violating the producer's contract.
Producers represent - ✔✔the insurance company, not the insured.
, Independent producers - ✔✔own their own accounts and are not insurance company
employees.
Producers have - ✔✔express, implied and apparent authority.
The authority a producer - ✔✔has that is written in his or her contract is known as
express authority.
A producer's binding authority (if any) - ✔✔is expressed (written down) in the
producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - ✔✔but is actual authority the
producer has to transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - ✔✔by the acronym C-O-A-
L (consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - ✔✔is offer and acceptance, or mutual
agreement.
Advertising the availability of insurance is not - ✔✔considered to be an offer.
A specific and definite proposal to enter into a contract is known as - ✔✔an offer.
The consideration on a policy need - ✔✔not be equal.
A policy may not be voided - ✔✔due to unequal consideration.
