ALABAMA LIFE INSURANCE
EXAM 2025 450 ACTUAL
EXAMS QUESTIONS
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
,1. **Which of the following would be considered a speculative risk?**
*The possibility the painting you bought might be a long-lost masterpiece*
**Answer:** This is a speculative risk because it involves the chance of either gain or
loss.
2. **A company owned by its policy owners is called:**
**Answer:** A mutual insurance company.
3. **A producer acting as an agent is representing:**
**Answer:** Always the insurer.
4. **All of the following are elements of a contract, except:**
**Answer:** Authority.
5. **All enforceable contracts must include these characteristics: offer and acceptance
(agreement), considerations, competent parties, and legal purpose. Which is NOT an
element?**
**Answer:** Authority.
6. **Each of the following would be an element in the definition of fraud, except:**
**Answer:** An individual warrants a fact stated on the application.
7. **Examples of Fraud include:**
- Intentional material misrepresentation with the intent of causing injury to another
party
- Withholding of known material facts
- A false statement on the application that is material to the acceptance of the risk
,8. **A company licensed to sell insurance in a particular state is:**
**Answer:** An authorized company.
9. **In order to be valid, a contract must be between individuals considered legally able
to enter into an agreement. This principle is known as:**
**Answer:** Competent parties.
10. **An insurance contract is an aleatory contract. This means:**
**Answer:** Equal value is not given by both parties to the contract.
11. **The ____________ market is a private source of coverage of last resort for
individuals or businesses rejected by voluntary market insurers.**
**Answer:** Residual.
12. **To address adverse selection what can an insurer legally do?**
**Answer:** Establish and enforce sound underwriting practices.
13. **A contract drafted by an insurer with no input or alteration from the insured is
considered a:**
**Answer:** Contract of Adhesion.
14. **_________ refers to the jurisdiction where an insurer was formed or incorporated.**
**Answer:** Domicile.
15. **_____________ insurance allows coverage obtained when not available from
admitted carriers.**
**Answer:** Surplus lines.
, 16. **To make insurance more affordable and protect the insurer from paying too much
in claims, insurers will:**
**Answer:** Reinsure the risk.
17. **The field underwriter is the _________ and is not a determiner of insurability.**
**Answer:** Producer.
18. **Third-party ownership refers to:**
**Answer:** A situation where the policy owner is someone other than the insured.
19. **What statement best describes the term reserve?**
**Answer:** That amount which, when increased by future premiums and interest,
will enable the company to meet future death claims.
20. **The applicant, if other than the proposed insured, must have:**
**Answer:** An insurable interest in the life of the insured.
21. **Controlled business may be defined as insurance sold:**
**Answer:** To the producer, the producer's family and friends, and the producer's
business associates.
22. **With regard to life insurance policies, loading refers to:**
**Answer:** Assigning the appropriate share of operating expenses to each policy.
23. **Which statement about the average number of people who die each year is
true?**
**Answer:** It is called the mortality rate.
24. **Which of the following is NOT a characteristic of life insurance as property?**
EXAM 2025 450 ACTUAL
EXAMS QUESTIONS
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
,1. **Which of the following would be considered a speculative risk?**
*The possibility the painting you bought might be a long-lost masterpiece*
**Answer:** This is a speculative risk because it involves the chance of either gain or
loss.
2. **A company owned by its policy owners is called:**
**Answer:** A mutual insurance company.
3. **A producer acting as an agent is representing:**
**Answer:** Always the insurer.
4. **All of the following are elements of a contract, except:**
**Answer:** Authority.
5. **All enforceable contracts must include these characteristics: offer and acceptance
(agreement), considerations, competent parties, and legal purpose. Which is NOT an
element?**
**Answer:** Authority.
6. **Each of the following would be an element in the definition of fraud, except:**
**Answer:** An individual warrants a fact stated on the application.
7. **Examples of Fraud include:**
- Intentional material misrepresentation with the intent of causing injury to another
party
- Withholding of known material facts
- A false statement on the application that is material to the acceptance of the risk
,8. **A company licensed to sell insurance in a particular state is:**
**Answer:** An authorized company.
9. **In order to be valid, a contract must be between individuals considered legally able
to enter into an agreement. This principle is known as:**
**Answer:** Competent parties.
10. **An insurance contract is an aleatory contract. This means:**
**Answer:** Equal value is not given by both parties to the contract.
11. **The ____________ market is a private source of coverage of last resort for
individuals or businesses rejected by voluntary market insurers.**
**Answer:** Residual.
12. **To address adverse selection what can an insurer legally do?**
**Answer:** Establish and enforce sound underwriting practices.
13. **A contract drafted by an insurer with no input or alteration from the insured is
considered a:**
**Answer:** Contract of Adhesion.
14. **_________ refers to the jurisdiction where an insurer was formed or incorporated.**
**Answer:** Domicile.
15. **_____________ insurance allows coverage obtained when not available from
admitted carriers.**
**Answer:** Surplus lines.
, 16. **To make insurance more affordable and protect the insurer from paying too much
in claims, insurers will:**
**Answer:** Reinsure the risk.
17. **The field underwriter is the _________ and is not a determiner of insurability.**
**Answer:** Producer.
18. **Third-party ownership refers to:**
**Answer:** A situation where the policy owner is someone other than the insured.
19. **What statement best describes the term reserve?**
**Answer:** That amount which, when increased by future premiums and interest,
will enable the company to meet future death claims.
20. **The applicant, if other than the proposed insured, must have:**
**Answer:** An insurable interest in the life of the insured.
21. **Controlled business may be defined as insurance sold:**
**Answer:** To the producer, the producer's family and friends, and the producer's
business associates.
22. **With regard to life insurance policies, loading refers to:**
**Answer:** Assigning the appropriate share of operating expenses to each policy.
23. **Which statement about the average number of people who die each year is
true?**
**Answer:** It is called the mortality rate.
24. **Which of the following is NOT a characteristic of life insurance as property?**
