20-44 Personal Lines Agent Pre-Licensing
Course (Unit 2) UPDATED ACTUAL
Exam Questions and CORRECT Answers
**Risk** - CORRECT ANSWER - the chance of financial loss (from an insurance
perspective)
**Pure Risk** - CORRECT ANSWER - ONLY the chance of loss
**Speculative Risk [Speck-que-lah-tive]** - CORRECT ANSWER - Chance of loss or
gain
Insurance - CORRECT ANSWER - protection against possible financial loss; designed to
offset the financial impact upon an insured of pure risk
Law of Large Numbers - CORRECT ANSWER - the larger the number of individuals that
are randomly drawn from a population, the more representative the resulting group will be of the
entire population
Policy - CORRECT ANSWER - a written contract or agreement
Insurance - CORRECT ANSWER - a contract whereby one undertakes to indemnify
another or pay or allow a specified amount or a determinable benefit upon determinable
contingencies.
Endorsement - CORRECT ANSWER - A modification to the original policy which
changes it in some way (Adding, Modifying, Changing coverage)
Black's Law Dictionary - CORRECT ANSWER - ...defines a contract as an agreement
between two or more parties creating obligations which are legally enforceable
, Communication - CORRECT ANSWER - __________ of the acceptance in the prescribed
manner and time frame
Offer - CORRECT ANSWER - Made by one party to others
Mutuality of Obligation [Mew-chu-al-ih-tee] - CORRECT ANSWER - All parties must
have legal standing to engage in the agreement
Capacity - CORRECT ANSWER - All parties must have legal standing to engage in the
agreement
Oral or Written - CORRECT ANSWER - contracts can be ________ or _________
Acceptance - CORRECT ANSWER - Unequivocal acceptance of the offer
Consideration - CORRECT ANSWER - Something of value exchanged exchanged
between the parties
Competency (Com-peh-ten-see) - CORRECT ANSWER - All parties must have the
mental wherewithal to fairly engage in the agreement
Legality - CORRECT ANSWER - The agreement must have a legal intent
Contract - CORRECT ANSWER - A promis or agreement that is enforceable (en-force-a-
bull) under the law.
Mutual Assent (Meeting of the Minds) - CORRECT ANSWER - When two parties have
agreed upon something and are prepared to enter into a contract.
Course (Unit 2) UPDATED ACTUAL
Exam Questions and CORRECT Answers
**Risk** - CORRECT ANSWER - the chance of financial loss (from an insurance
perspective)
**Pure Risk** - CORRECT ANSWER - ONLY the chance of loss
**Speculative Risk [Speck-que-lah-tive]** - CORRECT ANSWER - Chance of loss or
gain
Insurance - CORRECT ANSWER - protection against possible financial loss; designed to
offset the financial impact upon an insured of pure risk
Law of Large Numbers - CORRECT ANSWER - the larger the number of individuals that
are randomly drawn from a population, the more representative the resulting group will be of the
entire population
Policy - CORRECT ANSWER - a written contract or agreement
Insurance - CORRECT ANSWER - a contract whereby one undertakes to indemnify
another or pay or allow a specified amount or a determinable benefit upon determinable
contingencies.
Endorsement - CORRECT ANSWER - A modification to the original policy which
changes it in some way (Adding, Modifying, Changing coverage)
Black's Law Dictionary - CORRECT ANSWER - ...defines a contract as an agreement
between two or more parties creating obligations which are legally enforceable
, Communication - CORRECT ANSWER - __________ of the acceptance in the prescribed
manner and time frame
Offer - CORRECT ANSWER - Made by one party to others
Mutuality of Obligation [Mew-chu-al-ih-tee] - CORRECT ANSWER - All parties must
have legal standing to engage in the agreement
Capacity - CORRECT ANSWER - All parties must have legal standing to engage in the
agreement
Oral or Written - CORRECT ANSWER - contracts can be ________ or _________
Acceptance - CORRECT ANSWER - Unequivocal acceptance of the offer
Consideration - CORRECT ANSWER - Something of value exchanged exchanged
between the parties
Competency (Com-peh-ten-see) - CORRECT ANSWER - All parties must have the
mental wherewithal to fairly engage in the agreement
Legality - CORRECT ANSWER - The agreement must have a legal intent
Contract - CORRECT ANSWER - A promis or agreement that is enforceable (en-force-a-
bull) under the law.
Mutual Assent (Meeting of the Minds) - CORRECT ANSWER - When two parties have
agreed upon something and are prepared to enter into a contract.
