Life and Health Insurance Exam 1
Questions and Answers Already
Graded A+
B - correct answer ✔✔UNIT 1: The term used to describe the individual who is covered by the
insurance is
A. insurer
B. insured
C. policyowner
D. risk
B - correct answer ✔✔Which of the following is a risk?
A. A car may need to have new brakes installed after several years of regular driving.
B. An individual may need medical attention after slipping on the ice and falling.
C. Both are examples of risk.
D. Neither is an example of risk.
A - correct answer ✔✔The estimation of future losses is more accurate when information is
from
A. a small select group
B. a large group
C. a medium-sized group
D. any size group; group size does not matter
B - correct answer ✔✔The application of the law of large numbers enables insurers to
,A. estimate the future losses of a class or group of people
B. predict the future losses of speci c individuals
C. charge higher premiums for insurance
D. calculate mortality charges
C - correct answer ✔✔Which type of policy is designed to protect against the risk of living too
long?
A. Casualty
B. Life
C. Annuity
D. Medical expense
B - correct answer ✔✔Which of the following is a type of insurance company owned by its
shareholders?
A. Mutual B. Stock
C. Lloyd's D. Reinsurer
B - correct answer ✔✔The ZYX Insurance Company is incorporated in Alabama. While doing
business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer
C - correct answer ✔✔The ZYX Insurance Company is incorporated in Mexico. While doing
business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer
A - correct answer ✔✔Self-insurance is an example of which method of handling risk?
A. Acceptance B. Transference C. Avoidance D. Reduction
,D - correct answer ✔✔Which of the following terms is used to denote insurance companies?
A. Broker
B. Exchange C. Corporation D. Insurer
C - correct answer ✔✔A social device for spreading the chance of financial loss among a large
number of people is the definition of
A. hazard
B. risk
C. insurance
D. peril
A - correct answer ✔✔Which of the following risks is most likely to be
insurable?
A. George is concerned about the financial impact his premature death would have on his
family.
B. Talyn is concerned about the financial impact large betting losses at the horse track will have
on his retirement savings.
C. John is concerned about the financial impact on his savings when his car eventually becomes
worn enough to need to be replaced.
D. Jewel is concerned about the nancial effect losing her hat would have on her weekly
spending money.
B - correct answer ✔✔Roger refuses to travel by airplane. Roger is managing the risk of being in
a plane crash by
A. reduction B. avoidance C. transference D. retention
, C - correct answer ✔✔Chianna becomes injured in a car accident caused when she took her
eyes off the road to answer her cell phone. This is an example of
A. a physical hazard
B. a moral hazard
C. a morale hazard
D. a legal hazard
D - correct answer ✔✔An arrangement in which an insurer transfers part of the insurance risk
to another insurance company is known as
A. avoidance
B. fraud
C. Lloyd's associations
D. reinsurance
C - correct answer ✔✔Which of the following is NOT an example of insurable interest?
A. Jose wishes to take out a life insurance policy on his own life to provide for his family in the
event of his death.
B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral costs will
be covered when the time comes.
C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a
careless driver and Juan thinks his neighbor is likely to die in a car accident.
D. Carla wishes to take out a life insurance policy on her best salesperson to protect the
business from lost sales in the event of the salesperson's death.
A - correct answer ✔✔Kim is injured in a house fire. When the bills come, the insurance
company pays 80% of the cost, and Kim pays the rest. This is an example of
A. coinsurance
B. a deductible
Questions and Answers Already
Graded A+
B - correct answer ✔✔UNIT 1: The term used to describe the individual who is covered by the
insurance is
A. insurer
B. insured
C. policyowner
D. risk
B - correct answer ✔✔Which of the following is a risk?
A. A car may need to have new brakes installed after several years of regular driving.
B. An individual may need medical attention after slipping on the ice and falling.
C. Both are examples of risk.
D. Neither is an example of risk.
A - correct answer ✔✔The estimation of future losses is more accurate when information is
from
A. a small select group
B. a large group
C. a medium-sized group
D. any size group; group size does not matter
B - correct answer ✔✔The application of the law of large numbers enables insurers to
,A. estimate the future losses of a class or group of people
B. predict the future losses of speci c individuals
C. charge higher premiums for insurance
D. calculate mortality charges
C - correct answer ✔✔Which type of policy is designed to protect against the risk of living too
long?
A. Casualty
B. Life
C. Annuity
D. Medical expense
B - correct answer ✔✔Which of the following is a type of insurance company owned by its
shareholders?
A. Mutual B. Stock
C. Lloyd's D. Reinsurer
B - correct answer ✔✔The ZYX Insurance Company is incorporated in Alabama. While doing
business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer
C - correct answer ✔✔The ZYX Insurance Company is incorporated in Mexico. While doing
business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer
A - correct answer ✔✔Self-insurance is an example of which method of handling risk?
A. Acceptance B. Transference C. Avoidance D. Reduction
,D - correct answer ✔✔Which of the following terms is used to denote insurance companies?
A. Broker
B. Exchange C. Corporation D. Insurer
C - correct answer ✔✔A social device for spreading the chance of financial loss among a large
number of people is the definition of
A. hazard
B. risk
C. insurance
D. peril
A - correct answer ✔✔Which of the following risks is most likely to be
insurable?
A. George is concerned about the financial impact his premature death would have on his
family.
B. Talyn is concerned about the financial impact large betting losses at the horse track will have
on his retirement savings.
C. John is concerned about the financial impact on his savings when his car eventually becomes
worn enough to need to be replaced.
D. Jewel is concerned about the nancial effect losing her hat would have on her weekly
spending money.
B - correct answer ✔✔Roger refuses to travel by airplane. Roger is managing the risk of being in
a plane crash by
A. reduction B. avoidance C. transference D. retention
, C - correct answer ✔✔Chianna becomes injured in a car accident caused when she took her
eyes off the road to answer her cell phone. This is an example of
A. a physical hazard
B. a moral hazard
C. a morale hazard
D. a legal hazard
D - correct answer ✔✔An arrangement in which an insurer transfers part of the insurance risk
to another insurance company is known as
A. avoidance
B. fraud
C. Lloyd's associations
D. reinsurance
C - correct answer ✔✔Which of the following is NOT an example of insurable interest?
A. Jose wishes to take out a life insurance policy on his own life to provide for his family in the
event of his death.
B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral costs will
be covered when the time comes.
C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a
careless driver and Juan thinks his neighbor is likely to die in a car accident.
D. Carla wishes to take out a life insurance policy on her best salesperson to protect the
business from lost sales in the event of the salesperson's death.
A - correct answer ✔✔Kim is injured in a house fire. When the bills come, the insurance
company pays 80% of the cost, and Kim pays the rest. This is an example of
A. coinsurance
B. a deductible
