Wisconsin Life Insurance Course Exam
Questions and Answers 100% Pass
Stock Companies - ✔✔-private organization focused to make profits for
shareholders
-Stock dividends are paid to stock holders
-policyholders do not participate
Mutual Companies - ✔✔-have no stock holders
-owners are policy owners
-policy holders can vote for members of the board
-policy owners receive dividends
Lloyd's of London - ✔✔-A syndicate of individuals who underwrite
insurance
Reinsurers - ✔✔-are a specialized branch of the insurance industry
because they insure insurers
-reinsure risk to lessen it if a large claim would be made
1945 McCarren-Ferguson Act - ✔✔Insurance would be regulated by the
states but would conform to federal anti trust laws
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©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,1970 Fair Credit Reporting Act - ✔✔which is the authority that requires fair
and accurate reporting of information about consumers, including
applicaitons for insurance. Insurers must inform applicants about any
investigations that are being made
NAIC - ✔✔All State insurance commisioners or directos are members
Broad objectives
1. To encourage uniformity in state insurance laws and regulations
2. To assist in the administration of those laws and regulations by
promoting efficiency
3. To protect the interest of policy owners and consumers
4. To preserve state regulations of the insurance business
State Guaranty Association - ✔✔-state established guaranty funds or
guaranty associations to support insurers and protect consumers
-should an insurer be unable to pay its claims the association will step in
and cover the consumers unpaid claims
AM Best - ✔✔A+
Standard and Poors or Moodys - ✔✔AA-
Fitch - ✔✔A1
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©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,Law of Large Numbers - ✔✔This law states that larger groups provide an
increased degree of accuracy in loss predictions, based on past
experience.
Speculative Risk - ✔✔is a risk that presents the chance for loss and a gain
ex. Gambling
Pure Risk - ✔✔are the only insurable risks and present a potential for loss
only with no possibility of gain
ex. death
Avoidance - ✔✔elimination of the hazard
Reduction - ✔✔minimizing the severity of a potential loss
Retention - ✔✔self insure, used when losses are highly predictable and the
worst loss is not serious
Transference - ✔✔Buying insurance is the best way to transfer risk
Physical Hazards - ✔✔poor health, overweight, blind
Moral Hazards - ✔✔dishonesty, drugs, alcohol abuse
Morale Hazards - ✔✔careless attitude
Elements of Insurable Risk - ✔✔loss must be
-due to chance
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©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, -definite and measurable
-predictable
-cannot be catastrophic
-exposure to be insured must be large
-loss must be randomly selected
Offer and acceptance - ✔✔a definite, unqualified proposal which can be
accepted but if a counter offer is made then the first offer is void
Legal Purpose - ✔✔the reason the parties enter into the agreement must
be legal
Competent Parties - ✔✔the insurer must be licensed or authorized while
the insured is presumed competent with three exceptions
-Minor
-The mentally infirm
-Those under the influence of alcohol or drugs
Aleatory - ✔✔unequal exchange of value or consideration for both parties
Adhesion - ✔✔Insurance contracts are contracts of adhesion. This means
that the contract has been prepared by one party with no negotiation
between the applicant and insurer. In effect, the applicant "adheres" to the
terms of the contract on a take it or leave it basis when accepted. Any
4
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
Questions and Answers 100% Pass
Stock Companies - ✔✔-private organization focused to make profits for
shareholders
-Stock dividends are paid to stock holders
-policyholders do not participate
Mutual Companies - ✔✔-have no stock holders
-owners are policy owners
-policy holders can vote for members of the board
-policy owners receive dividends
Lloyd's of London - ✔✔-A syndicate of individuals who underwrite
insurance
Reinsurers - ✔✔-are a specialized branch of the insurance industry
because they insure insurers
-reinsure risk to lessen it if a large claim would be made
1945 McCarren-Ferguson Act - ✔✔Insurance would be regulated by the
states but would conform to federal anti trust laws
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,1970 Fair Credit Reporting Act - ✔✔which is the authority that requires fair
and accurate reporting of information about consumers, including
applicaitons for insurance. Insurers must inform applicants about any
investigations that are being made
NAIC - ✔✔All State insurance commisioners or directos are members
Broad objectives
1. To encourage uniformity in state insurance laws and regulations
2. To assist in the administration of those laws and regulations by
promoting efficiency
3. To protect the interest of policy owners and consumers
4. To preserve state regulations of the insurance business
State Guaranty Association - ✔✔-state established guaranty funds or
guaranty associations to support insurers and protect consumers
-should an insurer be unable to pay its claims the association will step in
and cover the consumers unpaid claims
AM Best - ✔✔A+
Standard and Poors or Moodys - ✔✔AA-
Fitch - ✔✔A1
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,Law of Large Numbers - ✔✔This law states that larger groups provide an
increased degree of accuracy in loss predictions, based on past
experience.
Speculative Risk - ✔✔is a risk that presents the chance for loss and a gain
ex. Gambling
Pure Risk - ✔✔are the only insurable risks and present a potential for loss
only with no possibility of gain
ex. death
Avoidance - ✔✔elimination of the hazard
Reduction - ✔✔minimizing the severity of a potential loss
Retention - ✔✔self insure, used when losses are highly predictable and the
worst loss is not serious
Transference - ✔✔Buying insurance is the best way to transfer risk
Physical Hazards - ✔✔poor health, overweight, blind
Moral Hazards - ✔✔dishonesty, drugs, alcohol abuse
Morale Hazards - ✔✔careless attitude
Elements of Insurable Risk - ✔✔loss must be
-due to chance
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, -definite and measurable
-predictable
-cannot be catastrophic
-exposure to be insured must be large
-loss must be randomly selected
Offer and acceptance - ✔✔a definite, unqualified proposal which can be
accepted but if a counter offer is made then the first offer is void
Legal Purpose - ✔✔the reason the parties enter into the agreement must
be legal
Competent Parties - ✔✔the insurer must be licensed or authorized while
the insured is presumed competent with three exceptions
-Minor
-The mentally infirm
-Those under the influence of alcohol or drugs
Aleatory - ✔✔unequal exchange of value or consideration for both parties
Adhesion - ✔✔Insurance contracts are contracts of adhesion. This means
that the contract has been prepared by one party with no negotiation
between the applicant and insurer. In effect, the applicant "adheres" to the
terms of the contract on a take it or leave it basis when accepted. Any
4
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
