TEXAS INSURANCE LICENSE EXAM 3 LATEST VERSIONS (VERSION A, B AND C) 2024-2025 ACTUAL EXAM
Insurance - (answer) a device for the transfer of risk from an individual to a large group
Insurer - (answer) the company that sells the insurance and as a party to the contract agrees to
indemnify an insured.
Insured - (answer) is the individual or entity that purchases insurance.
the Law of Numbers - (answer) this states that the larger the number of similar risks, the more accurate
and reliable a prediction of loss will be.
Speculative Risks - (answer) this involves the possibility of both gain and loss. Traditional insurance
policies cannot be used to cover these.
Ex: stocks, bonds, gambling.
Pure Risks - (answer) this involves the possibility of loss, gain is not possible.
Ex: flooding, injuries, fires.
To transfer risk, peace of mind, required by law, required by vendor - (answer) Why do people purchase
insurance? (4)
Domestic Insurance - (answer) a company that is incorporated and is formed under the laws of the
state in which it is located.
Foreign Insurance - (answer) a company located and organized under the laws of another sate, but
licensed to do business elsewhere.
Ex: Headquarters are in California, but business is done in Kansas.
, TEXAS INSURANCE LICENSE EXAM 3 LATEST VERSIONS (VERSION A, B AND C) 2024-2025 ACTUAL EXAM
Alien Insurance - (answer) a company formed under the laws of another country, other than the United
States.
Offer, Acceptance, Consideration, Competent Parties, Legal Purpose, Insurable Interest. - (answer)
What are the Essential Elements of a Contract? (Calico)
Consideration - (answer) the insurance contract or policy is not a legally binding instrument unless
supported by some form of legal consideration, or possibly goods and services of tangible values.
The promise to pay is this.
Contract of Adhesion - (answer) This contract is drafted by the insurer with the insured having no
involvement in the preparation. They either take it or leave it.
Aleatory - (answer) this is based on the exchange of unequal amounts or uncertain events.
Personal Contract - (answer) the identities of the parties involved in the insurance contract are very
important to the insurer.
Ex: the insurer has the right to select the customers it wishes to insure.
Indemnity - (answer) the process of restoring the customer to the same financial condition that they
were prior to the loss.
Good Faith - (answer) the courts require that the insurer operate in this manner because the insurance
contract revolves around an intangible object.
This is expected from both the customer and the insurer.
Insurance - (answer) a device for the transfer of risk from an individual to a large group
Insurer - (answer) the company that sells the insurance and as a party to the contract agrees to
indemnify an insured.
Insured - (answer) is the individual or entity that purchases insurance.
the Law of Numbers - (answer) this states that the larger the number of similar risks, the more accurate
and reliable a prediction of loss will be.
Speculative Risks - (answer) this involves the possibility of both gain and loss. Traditional insurance
policies cannot be used to cover these.
Ex: stocks, bonds, gambling.
Pure Risks - (answer) this involves the possibility of loss, gain is not possible.
Ex: flooding, injuries, fires.
To transfer risk, peace of mind, required by law, required by vendor - (answer) Why do people purchase
insurance? (4)
Domestic Insurance - (answer) a company that is incorporated and is formed under the laws of the
state in which it is located.
Foreign Insurance - (answer) a company located and organized under the laws of another sate, but
licensed to do business elsewhere.
Ex: Headquarters are in California, but business is done in Kansas.
, TEXAS INSURANCE LICENSE EXAM 3 LATEST VERSIONS (VERSION A, B AND C) 2024-2025 ACTUAL EXAM
Alien Insurance - (answer) a company formed under the laws of another country, other than the United
States.
Offer, Acceptance, Consideration, Competent Parties, Legal Purpose, Insurable Interest. - (answer)
What are the Essential Elements of a Contract? (Calico)
Consideration - (answer) the insurance contract or policy is not a legally binding instrument unless
supported by some form of legal consideration, or possibly goods and services of tangible values.
The promise to pay is this.
Contract of Adhesion - (answer) This contract is drafted by the insurer with the insured having no
involvement in the preparation. They either take it or leave it.
Aleatory - (answer) this is based on the exchange of unequal amounts or uncertain events.
Personal Contract - (answer) the identities of the parties involved in the insurance contract are very
important to the insurer.
Ex: the insurer has the right to select the customers it wishes to insure.
Indemnity - (answer) the process of restoring the customer to the same financial condition that they
were prior to the loss.
Good Faith - (answer) the courts require that the insurer operate in this manner because the insurance
contract revolves around an intangible object.
This is expected from both the customer and the insurer.
