Utah Health Insurance Exam 2025
Questions and Answers 100% Pass
Insurance - ✔✔Transfer of risk.
Types of risk - ✔✔Pure and Speculative
Pure Risk - ✔✔A chance of loss or no loss, but no chance of gain. The ONLY type of
insurable risk.
Speculative Risk - ✔✔Chance of loss or gain. CANNOT be insured. (Example:
Buying stock in the stock market)
Types of Hazards - ✔✔Physical, Moral and Morale
Physical Hazard - ✔✔A physical condition that increases the chance of loss.
Moral Hazard - ✔✔Dishonesty or character defects in an individual that increase the
frequency or severity of loss (Example: Applicant lies on insurance application)
Morale Hazard - ✔✔Through carlessness or irresponsible actions an increase in the
possibilty of a loss. (Example: Not cutting down a tree branch that might fall on your
house because you have insurance if it does)
Perils - ✔✔causes of loss insured against in an insurance policy
Avoidance - ✔✔Eliminating exposure to a loss (not driving so you won't get in a car
accident)
retention - ✔✔Planned assumption of risk through the use of deductibles, co-
payments, or self-insurance.
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 1
,reduction - ✔✔Actions such as installing smoke detectors to reduce the risk of loss
from fire or getting an annual physical to help prevent/detect health problems early.
Transfer - ✔✔Transferring the risk of loss to another company or entity. Insurance is
the most common way to transfer risk.
To be insurable, a risk must be - ✔✔-due to chance
-Definite and measurable
-Statistically predictable
-NOT catastrophic
-Large loss exposure (large pool of randomly selected people/risks)
Adverse Selection - ✔✔Tendency for poorer than average risks to seek insurance.
Reinsurance - ✔✔Insurance purchased by other Insurer(s) to spread or diversify risk;
promotes industry stability.
Ceding Insurer - ✔✔The company transferring risk in a reinsurance arrangement.
assuming insurer - ✔✔reinsurer or company who is taking over the risk
Stock Companies - ✔✔-Owned by stockholders
-nonparticipating (policy holders DO NOT share in profits or losses)
Mutual Companies - ✔✔-Owned by the policyowners
-Participating (ploicyowners are entitled to dividends)
-Dividends are NOT guaranteed
Fraternal Benefit Societies - ✔✔Must be nonprofit, have a lodge system (ie. religious
organization), representative form of government and offer insurance to its members
only.
Certificate of Authority - ✔✔License for insurance company to do business. This
allows insurers to be considered ADMITTED or AUTHORIZED.
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 2
,Domestic Insurer - ✔✔An insurance company that conducts business in the state of
incorporation.
Foreign Insurer - ✔✔An insurance company that is incorporated in another state.
Alien Insurer - ✔✔An insurance company that is incorporated outside the United
States.
Who does an agent represent? - ✔✔The INSURER (insurance company) not the
insured.
Express Authority - ✔✔The authority granted to an agent by means of the agent's
written contract..
Implied Authority - ✔✔the authority that the agent has that is not specifically listed
in their contract, but is assumed to have to conduct business. (Required to be able to
conduct business). Example: collecting premiums
Apparent Authority - ✔✔A third party's reasonable belief that an agent has
authority to act on the principal's behalf. Based on the actions words, etc of the
principal. Example: Using business cards or brochures
Fiduciary Responsibility - ✔✔-An ethical and legal obligation to perform a person's
duties in a trustworthy manner.
-Money related
-Must not commingle funds
-Forwarding premiums to the insurer/principal in a timely manner is an example of
acting in a fiduciary capacity
Parts of a contract - ✔✔Offer, acceptance, consideration, and legal purpose
Consideration - ✔✔Exchanging something of value
Insured's Consideration - ✔✔1. A truthful and complete application
2. Premium Payment
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 3
, Insurer's Consideration - ✔✔Promise to pay qualifying claims
Acceptance - ✔✔UNDERWRITER approves a prepaid application.
(An agent/producer CANNOT bind coverage, but they can accept an application)
Legal Purpose - ✔✔Insurable interest and consent
1. Must be of age (18+)
2. Cannot be high
3. Cannot be drunk
4. Must be mentall competent
Contract of Adhesion - ✔✔Take it or leave it agreements, where the insured has no
say in the contract terms and conditions.
Aleatory Contract - ✔✔A contract where the values exchanged may not be equal but
depend on an uncertain event
Personal Contract - ✔✔A contract between an individual and an insurer.
unilateral contract - ✔✔Only ONE of the parties is legally bound (the insurance
company).
Conditional Contract - ✔✔Certain conditions must be met in order for policy to pay
out.
Ambiguities in Contract of Adhesion - ✔✔Will always be interpreted in favor of the
insured NOT the insurance company.
indemnity - ✔✔Allows the insured to collect only to the extent of financial loss and
not gain financially. (Reimbursement)
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 4
Questions and Answers 100% Pass
Insurance - ✔✔Transfer of risk.
Types of risk - ✔✔Pure and Speculative
Pure Risk - ✔✔A chance of loss or no loss, but no chance of gain. The ONLY type of
insurable risk.
Speculative Risk - ✔✔Chance of loss or gain. CANNOT be insured. (Example:
Buying stock in the stock market)
Types of Hazards - ✔✔Physical, Moral and Morale
Physical Hazard - ✔✔A physical condition that increases the chance of loss.
Moral Hazard - ✔✔Dishonesty or character defects in an individual that increase the
frequency or severity of loss (Example: Applicant lies on insurance application)
Morale Hazard - ✔✔Through carlessness or irresponsible actions an increase in the
possibilty of a loss. (Example: Not cutting down a tree branch that might fall on your
house because you have insurance if it does)
Perils - ✔✔causes of loss insured against in an insurance policy
Avoidance - ✔✔Eliminating exposure to a loss (not driving so you won't get in a car
accident)
retention - ✔✔Planned assumption of risk through the use of deductibles, co-
payments, or self-insurance.
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 1
,reduction - ✔✔Actions such as installing smoke detectors to reduce the risk of loss
from fire or getting an annual physical to help prevent/detect health problems early.
Transfer - ✔✔Transferring the risk of loss to another company or entity. Insurance is
the most common way to transfer risk.
To be insurable, a risk must be - ✔✔-due to chance
-Definite and measurable
-Statistically predictable
-NOT catastrophic
-Large loss exposure (large pool of randomly selected people/risks)
Adverse Selection - ✔✔Tendency for poorer than average risks to seek insurance.
Reinsurance - ✔✔Insurance purchased by other Insurer(s) to spread or diversify risk;
promotes industry stability.
Ceding Insurer - ✔✔The company transferring risk in a reinsurance arrangement.
assuming insurer - ✔✔reinsurer or company who is taking over the risk
Stock Companies - ✔✔-Owned by stockholders
-nonparticipating (policy holders DO NOT share in profits or losses)
Mutual Companies - ✔✔-Owned by the policyowners
-Participating (ploicyowners are entitled to dividends)
-Dividends are NOT guaranteed
Fraternal Benefit Societies - ✔✔Must be nonprofit, have a lodge system (ie. religious
organization), representative form of government and offer insurance to its members
only.
Certificate of Authority - ✔✔License for insurance company to do business. This
allows insurers to be considered ADMITTED or AUTHORIZED.
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 2
,Domestic Insurer - ✔✔An insurance company that conducts business in the state of
incorporation.
Foreign Insurer - ✔✔An insurance company that is incorporated in another state.
Alien Insurer - ✔✔An insurance company that is incorporated outside the United
States.
Who does an agent represent? - ✔✔The INSURER (insurance company) not the
insured.
Express Authority - ✔✔The authority granted to an agent by means of the agent's
written contract..
Implied Authority - ✔✔the authority that the agent has that is not specifically listed
in their contract, but is assumed to have to conduct business. (Required to be able to
conduct business). Example: collecting premiums
Apparent Authority - ✔✔A third party's reasonable belief that an agent has
authority to act on the principal's behalf. Based on the actions words, etc of the
principal. Example: Using business cards or brochures
Fiduciary Responsibility - ✔✔-An ethical and legal obligation to perform a person's
duties in a trustworthy manner.
-Money related
-Must not commingle funds
-Forwarding premiums to the insurer/principal in a timely manner is an example of
acting in a fiduciary capacity
Parts of a contract - ✔✔Offer, acceptance, consideration, and legal purpose
Consideration - ✔✔Exchanging something of value
Insured's Consideration - ✔✔1. A truthful and complete application
2. Premium Payment
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 3
, Insurer's Consideration - ✔✔Promise to pay qualifying claims
Acceptance - ✔✔UNDERWRITER approves a prepaid application.
(An agent/producer CANNOT bind coverage, but they can accept an application)
Legal Purpose - ✔✔Insurable interest and consent
1. Must be of age (18+)
2. Cannot be high
3. Cannot be drunk
4. Must be mentall competent
Contract of Adhesion - ✔✔Take it or leave it agreements, where the insured has no
say in the contract terms and conditions.
Aleatory Contract - ✔✔A contract where the values exchanged may not be equal but
depend on an uncertain event
Personal Contract - ✔✔A contract between an individual and an insurer.
unilateral contract - ✔✔Only ONE of the parties is legally bound (the insurance
company).
Conditional Contract - ✔✔Certain conditions must be met in order for policy to pay
out.
Ambiguities in Contract of Adhesion - ✔✔Will always be interpreted in favor of the
insured NOT the insurance company.
indemnity - ✔✔Allows the insured to collect only to the extent of financial loss and
not gain financially. (Reimbursement)
COPYRIGHT © 2025 BY SOPHIA BENNETT, ALL RIGHTS RESERVED 4
