PA LIFE, ACCIDENT, & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS 2025
Insurance - (ANSWER)defined as the transfer of PURE risk to the insurance company in consideration for
a premium.
The chance of loss without any chance of gain is called - (ANSWER)pure risk
Speculative risk - (ANSWER)has the possibility for gain or loss and is not insurable.
Risk is defined as the - (ANSWER)chance of loss.
A condition that could result in a loss is known as an - (ANSWER)exposure
A hazard is something that increases - (ANSWER)the chance of loss.
The presence of a physical hazard - (ANSWER)increases the chance of a loss occurring.
A peril is - (ANSWER)defined as a cause of loss, such as fire.
To be insurable, - (ANSWER)losses must be calculable.
The law of large numbers - (ANSWER)allows insurers to predict claims more accurately.
The law of large numbers applies to - (ANSWER)groups of people, not to individuals.
The more people in the group, - (ANSWER)the more accurate the predictions are.
Most insurers buy reinsurance - (ANSWER)to protect themselves in the event of a catastrophic loss.
Insurance laws are not required - (ANSWER)to be uniform from one state to another.
,PA LIFE, ACCIDENT, & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS 2025
A stock insurer - (ANSWER)may pay dividends to its shareholders (stockholders), but they may not be
guaranteed.
A reciprocal insurance company is managed by an - (ANSWER)attorney-in-fact.
An unincorporated association of individuals who insure each other is known as - (ANSWER)a reciprocal
insurer.
The government offers insurance primarily based upon - (ANSWER)social needs, such as flood insurance
and workers compensation, but does not offer insurance for the purpose of preventing fraud.
A foreign company - (ANSWER)has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - (ANSWER)an alien company.
A producer may be personally liable when - (ANSWER)violating the producer's contract.
Producers represent - (ANSWER)the insurance company, not the insured.
Independent producers - (ANSWER)own their own accounts and are not insurance company employees.
Producers have - (ANSWER)express, implied and apparent authority.
The authority a producer - (ANSWER)has that is written in his or her contract is known as express
authority.
A producer's binding authority (if any) - (ANSWER)is expressed (written down) in the producer's contract
with the insurer the producer represents.
, PA LIFE, ACCIDENT, & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS 2025
The authority not expressly (written) granted, - (ANSWER)but is actual authority the producer has to
transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - (ANSWER)by the acronym C-O-A-L
(consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - (ANSWER)is offer and acceptance, or mutual agreement.
Advertising the availability of insurance is not - (ANSWER)considered to be an offer.
A specific and definite proposal to enter into a contract is known as - (ANSWER)an offer.
The consideration on a policy need - (ANSWER)not be equal.
A policy may not be voided - (ANSWER)due to unequal consideration.
Under the consideration clause, - (ANSWER)something of value must be exchanged.
Because insurance contracts are contracts of adhesion, - (ANSWER)policy ambiguities always favor the
insured.
Insurance policies are considered - (ANSWER)to be unilateral contracts, in that only one party makes an
enforceable promise the insurer.
The principle of indemnity states - (ANSWER)the purpose of insurance is to restore the insured to the
same position as before the loss occurred.
The principle of utmost good faith states - (ANSWER)that all parties to an insurance transaction are
honest.
Insurance - (ANSWER)defined as the transfer of PURE risk to the insurance company in consideration for
a premium.
The chance of loss without any chance of gain is called - (ANSWER)pure risk
Speculative risk - (ANSWER)has the possibility for gain or loss and is not insurable.
Risk is defined as the - (ANSWER)chance of loss.
A condition that could result in a loss is known as an - (ANSWER)exposure
A hazard is something that increases - (ANSWER)the chance of loss.
The presence of a physical hazard - (ANSWER)increases the chance of a loss occurring.
A peril is - (ANSWER)defined as a cause of loss, such as fire.
To be insurable, - (ANSWER)losses must be calculable.
The law of large numbers - (ANSWER)allows insurers to predict claims more accurately.
The law of large numbers applies to - (ANSWER)groups of people, not to individuals.
The more people in the group, - (ANSWER)the more accurate the predictions are.
Most insurers buy reinsurance - (ANSWER)to protect themselves in the event of a catastrophic loss.
Insurance laws are not required - (ANSWER)to be uniform from one state to another.
,PA LIFE, ACCIDENT, & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS 2025
A stock insurer - (ANSWER)may pay dividends to its shareholders (stockholders), but they may not be
guaranteed.
A reciprocal insurance company is managed by an - (ANSWER)attorney-in-fact.
An unincorporated association of individuals who insure each other is known as - (ANSWER)a reciprocal
insurer.
The government offers insurance primarily based upon - (ANSWER)social needs, such as flood insurance
and workers compensation, but does not offer insurance for the purpose of preventing fraud.
A foreign company - (ANSWER)has their home office in another state.
An insurer incorporated outside of the U.S. who sells in the U.S. is - (ANSWER)an alien company.
A producer may be personally liable when - (ANSWER)violating the producer's contract.
Producers represent - (ANSWER)the insurance company, not the insured.
Independent producers - (ANSWER)own their own accounts and are not insurance company employees.
Producers have - (ANSWER)express, implied and apparent authority.
The authority a producer - (ANSWER)has that is written in his or her contract is known as express
authority.
A producer's binding authority (if any) - (ANSWER)is expressed (written down) in the producer's contract
with the insurer the producer represents.
, PA LIFE, ACCIDENT, & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS 2025
The authority not expressly (written) granted, - (ANSWER)but is actual authority the producer has to
transact normal business activities, is known as implied authority.
The elements of a legal contract may be remembered - (ANSWER)by the acronym C-O-A-L
(consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract - (ANSWER)is offer and acceptance, or mutual agreement.
Advertising the availability of insurance is not - (ANSWER)considered to be an offer.
A specific and definite proposal to enter into a contract is known as - (ANSWER)an offer.
The consideration on a policy need - (ANSWER)not be equal.
A policy may not be voided - (ANSWER)due to unequal consideration.
Under the consideration clause, - (ANSWER)something of value must be exchanged.
Because insurance contracts are contracts of adhesion, - (ANSWER)policy ambiguities always favor the
insured.
Insurance policies are considered - (ANSWER)to be unilateral contracts, in that only one party makes an
enforceable promise the insurer.
The principle of indemnity states - (ANSWER)the purpose of insurance is to restore the insured to the
same position as before the loss occurred.
The principle of utmost good faith states - (ANSWER)that all parties to an insurance transaction are
honest.
