PRIMERICA LIFE INSURANCE LICENSE
EXAM QUESTIONS WITH CORRECT
ANSWERS
Who might receive dividends from a mutual insurer?
A) Stockholders
B) Agents
C) Policyholders
D) Subscribers - ANSWER-C) Policyholders
An individuals tendency to be dishonest would be indicative of a:
A) Morale hazard
B) Pure hazard
C) Physical hazard
D) Moral Hazard - ANSWER-D) Moral Hazard
Which of the following best describes the aleatory nature of an insurance contract?
A) Only one of the parties being legally bound by the contract
B) Ambiguities are interpreted in favor of the insured
C) Policies are submitted to the insurer on a take-it-or-leave-it basis
D) Exchange of unequal values. - ANSWER-D) Exchange of unequal values
Which of the following is true regarding a risk retention group?
A) It is a liability insurance company owned by its members.
B) It provides support for underwriters and is not an insurance company.
C) It is a benefit society formed to provide insurance for members of an affiliated lodge.
D) It is a company owned by the stockholders that provides nonparticipating policies. -
ANSWER-A) It is a liability insurance company owned by its members.
An insured stated on her application for life insurance that she had never had a heart
attack, when in fact she had a series of minor heart attacks last year for which she
sought medical attention. Which of the following will explain the reason a death benefit
claim is denied?
A) Waiver
B) Utmost Good Faith
C) Estoppel
D) Material misrepresentation - ANSWER-D) Material misrepresentation
In forming an insurance contract, when does acceptance usually occur?
A) When an insurer delivers the policy
B) When an insurer receives an application
C) When an insured submits an application
, D) When an insurer's underwriter approves coverage. - ANSWER-D) When an insurer's
underwriter approves coverage.
The authority granted to an agent through the agent's contract is referred to as:
A) Absolute authority
B) Express authority
C) Apparent authority
D) Implied authority - ANSWER-B) Express Authority
Which authority is NOT stated in an agent's contract but is required for the agent to
conduct business?
A) Implied
B)Apparent
C)Assumed
D) Express - ANSWER-A) Implied
In terms of parties to a contract, which of the following does NOT describe a competent
party?
A) The person must be mentally competent to understand the contract.
B) The person must have at least completed secondary education
C) The person must not be under the influence of drugs or alcohol.
D) The person must be of legal age. - ANSWER-B) The person must have at least
completed secondary education.
A situation in which a person can only lose or have no change represents:
A) Adverse selection
B) Hazard
C) Pure risk
D) Speculative risk - ANSWER-C) Pure risk
Which of the following is a statement that is guaranteed to be true, and if untrue, may
breach an insurance contract?
A) Indemnity
B) Representation
C) Warranty
D) Concealment - ANSWER-C) Warranty
Which of the following is NOT a characteristic of an insurable risk?
A) The loss must be measurable
B) The loss exposure must be large
C) The loss must be catastrophic
D) The loss must be due to chance. - ANSWER-C) The loss must be catastrophic
An insured pays a $100 premium every month for his insurance coverage, yet the
insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance
contract does this describe?
EXAM QUESTIONS WITH CORRECT
ANSWERS
Who might receive dividends from a mutual insurer?
A) Stockholders
B) Agents
C) Policyholders
D) Subscribers - ANSWER-C) Policyholders
An individuals tendency to be dishonest would be indicative of a:
A) Morale hazard
B) Pure hazard
C) Physical hazard
D) Moral Hazard - ANSWER-D) Moral Hazard
Which of the following best describes the aleatory nature of an insurance contract?
A) Only one of the parties being legally bound by the contract
B) Ambiguities are interpreted in favor of the insured
C) Policies are submitted to the insurer on a take-it-or-leave-it basis
D) Exchange of unequal values. - ANSWER-D) Exchange of unequal values
Which of the following is true regarding a risk retention group?
A) It is a liability insurance company owned by its members.
B) It provides support for underwriters and is not an insurance company.
C) It is a benefit society formed to provide insurance for members of an affiliated lodge.
D) It is a company owned by the stockholders that provides nonparticipating policies. -
ANSWER-A) It is a liability insurance company owned by its members.
An insured stated on her application for life insurance that she had never had a heart
attack, when in fact she had a series of minor heart attacks last year for which she
sought medical attention. Which of the following will explain the reason a death benefit
claim is denied?
A) Waiver
B) Utmost Good Faith
C) Estoppel
D) Material misrepresentation - ANSWER-D) Material misrepresentation
In forming an insurance contract, when does acceptance usually occur?
A) When an insurer delivers the policy
B) When an insurer receives an application
C) When an insured submits an application
, D) When an insurer's underwriter approves coverage. - ANSWER-D) When an insurer's
underwriter approves coverage.
The authority granted to an agent through the agent's contract is referred to as:
A) Absolute authority
B) Express authority
C) Apparent authority
D) Implied authority - ANSWER-B) Express Authority
Which authority is NOT stated in an agent's contract but is required for the agent to
conduct business?
A) Implied
B)Apparent
C)Assumed
D) Express - ANSWER-A) Implied
In terms of parties to a contract, which of the following does NOT describe a competent
party?
A) The person must be mentally competent to understand the contract.
B) The person must have at least completed secondary education
C) The person must not be under the influence of drugs or alcohol.
D) The person must be of legal age. - ANSWER-B) The person must have at least
completed secondary education.
A situation in which a person can only lose or have no change represents:
A) Adverse selection
B) Hazard
C) Pure risk
D) Speculative risk - ANSWER-C) Pure risk
Which of the following is a statement that is guaranteed to be true, and if untrue, may
breach an insurance contract?
A) Indemnity
B) Representation
C) Warranty
D) Concealment - ANSWER-C) Warranty
Which of the following is NOT a characteristic of an insurable risk?
A) The loss must be measurable
B) The loss exposure must be large
C) The loss must be catastrophic
D) The loss must be due to chance. - ANSWER-C) The loss must be catastrophic
An insured pays a $100 premium every month for his insurance coverage, yet the
insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance
contract does this describe?
