PA LIFE, ACCIDENT, & HEALTH
INSURANCE EXAM 2024/2025
Insurance - Precise Answer ✔✔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 - Precise Answer ✔✔pure risk
Speculative risk - Precise Answer ✔✔has the possibility for gain or loss and is not insurable.
Risk is defined as the - Precise Answer ✔✔chance of loss.
A condition that could result in a loss is known as an - Precise Answer ✔✔exposure
A hazard is something that increases - Precise Answer ✔✔the chance of loss.
The presence of a physical hazard - Precise Answer ✔✔increases the chance of a loss occurring.
A peril is - Precise Answer ✔✔defined as a cause of loss, such as fire.
To be insurable, - Precise Answer ✔✔losses must be calculable.
The law of large numbers - Precise Answer ✔✔allows insurers to predict claims more accurately.
The law of large numbers applies to - Precise Answer ✔✔groups of people, not to individuals.
The more people in the group, - Precise Answer ✔✔the more accurate the predictions are.
,Most insurers buy reinsurance - Precise Answer ✔✔to protect themselves in the event of a catastrophic
loss.
Insurance laws are not required - Precise Answer ✔✔to be uniform from one state to another.
A stock insurer - Precise Answer ✔✔may pay dividends to its shareholders (stockholders), but they may
not be guaranteed.
A reciprocal insurance company is managed by an - Precise Answer ✔✔attorney-in-fact.
An unincorporated association of individuals who insure each other is known as - Precise Answer ✔✔a
reciprocal insurer.
The government offers insurance primarily based upon - Precise Answer ✔✔social needs, such as flood
insurance and workers compensation, but does not offer insurance for the purpose of preventing fraud.
A foreign company - Precise Answer ✔✔has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - Precise Answer ✔✔an alien
company.
A producer may be personally liable when - Precise Answer ✔✔violating the producer's contract.
Producers represent - Precise Answer ✔✔the insurance company, not the insured.
Independent producers - Precise Answer ✔✔own their own accounts and are not insurance company
employees.
Producers have - Precise Answer ✔✔express, implied and apparent authority.
, The authority a producer - Precise Answer ✔✔has that is written in his or her contract is known as
express authority.
A producer's binding authority (if any) - Precise Answer ✔✔is expressed (written down) in the
producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - Precise Answer ✔✔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 - Precise Answer ✔✔by the acronym C-O-A-L
(consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - Precise Answer ✔✔is offer and acceptance, or mutual agreement.
Advertising the availability of insurance is not - Precise Answer ✔✔considered to be an offer.
A specific and definite proposal to enter into a contract is known as - Precise Answer ✔✔an offer.
The consideration on a policy need - Precise Answer ✔✔not be equal.
A policy may not be voided - Precise Answer ✔✔due to unequal consideration.
Under the consideration clause, - Precise Answer ✔✔something of value must be exchanged.
Because insurance contracts are contracts of adhesion, - Precise Answer ✔✔policy ambiguities always
favor the insured.
Insurance policies are considered - Precise Answer ✔✔to be unilateral contracts, in that only one party
makes an enforceable promise the insurer.
INSURANCE EXAM 2024/2025
Insurance - Precise Answer ✔✔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 - Precise Answer ✔✔pure risk
Speculative risk - Precise Answer ✔✔has the possibility for gain or loss and is not insurable.
Risk is defined as the - Precise Answer ✔✔chance of loss.
A condition that could result in a loss is known as an - Precise Answer ✔✔exposure
A hazard is something that increases - Precise Answer ✔✔the chance of loss.
The presence of a physical hazard - Precise Answer ✔✔increases the chance of a loss occurring.
A peril is - Precise Answer ✔✔defined as a cause of loss, such as fire.
To be insurable, - Precise Answer ✔✔losses must be calculable.
The law of large numbers - Precise Answer ✔✔allows insurers to predict claims more accurately.
The law of large numbers applies to - Precise Answer ✔✔groups of people, not to individuals.
The more people in the group, - Precise Answer ✔✔the more accurate the predictions are.
,Most insurers buy reinsurance - Precise Answer ✔✔to protect themselves in the event of a catastrophic
loss.
Insurance laws are not required - Precise Answer ✔✔to be uniform from one state to another.
A stock insurer - Precise Answer ✔✔may pay dividends to its shareholders (stockholders), but they may
not be guaranteed.
A reciprocal insurance company is managed by an - Precise Answer ✔✔attorney-in-fact.
An unincorporated association of individuals who insure each other is known as - Precise Answer ✔✔a
reciprocal insurer.
The government offers insurance primarily based upon - Precise Answer ✔✔social needs, such as flood
insurance and workers compensation, but does not offer insurance for the purpose of preventing fraud.
A foreign company - Precise Answer ✔✔has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - Precise Answer ✔✔an alien
company.
A producer may be personally liable when - Precise Answer ✔✔violating the producer's contract.
Producers represent - Precise Answer ✔✔the insurance company, not the insured.
Independent producers - Precise Answer ✔✔own their own accounts and are not insurance company
employees.
Producers have - Precise Answer ✔✔express, implied and apparent authority.
, The authority a producer - Precise Answer ✔✔has that is written in his or her contract is known as
express authority.
A producer's binding authority (if any) - Precise Answer ✔✔is expressed (written down) in the
producer's contract with the insurer the producer represents.
The authority not expressly (written) granted, - Precise Answer ✔✔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 - Precise Answer ✔✔by the acronym C-O-A-L
(consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - Precise Answer ✔✔is offer and acceptance, or mutual agreement.
Advertising the availability of insurance is not - Precise Answer ✔✔considered to be an offer.
A specific and definite proposal to enter into a contract is known as - Precise Answer ✔✔an offer.
The consideration on a policy need - Precise Answer ✔✔not be equal.
A policy may not be voided - Precise Answer ✔✔due to unequal consideration.
Under the consideration clause, - Precise Answer ✔✔something of value must be exchanged.
Because insurance contracts are contracts of adhesion, - Precise Answer ✔✔policy ambiguities always
favor the insured.
Insurance policies are considered - Precise Answer ✔✔to be unilateral contracts, in that only one party
makes an enforceable promise the insurer.
