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ALABAMA LIFE & HEALTH INSURANCE EXAM
2026/2027 BANK COMPLETE CURRENT
TESTING QUESTION AND DETAILED CORRECT
ANSWER (VERIFIED) GUARANTEED PASS/TOP-
RATED A+.
LIFE & HEALTH INSURANCE
Maximize your success on the Alabama Life & Health Insurance
Exam by mastering key topics such as life insurance policies,
health and accident coverage, state regulations, ethics, and
underwriting principles. This exam ensures you understand both
product knowledge and legal responsibilities required for
licensure. It is designed for individuals pursuing licensure as life
and health insurance agents in Alabama.
Which of the following would be considered a speculative
risk? ...... ANSWER ....... The possibility the painting you
bought might be a long-lost masterpiece✓ ✓
A speculative risk is one in which there is a chance for either
loss or gain. Example: Gambling, Casino's, Lottery, etc. All of
the other choices describe pure risk, where there is no
chance of gain, only a chance of loss exists.
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Which is the proper term for a company owned by its policy
owners? ...... ANSWER ....... A mutual insurance
company✓ ✓
A producer who is acting as an agent is representing: ......
ANSWER ....... Always the insurer✓ ✓
All of the following are elements of a contract, except: ......
ANSWER ....... Authority✓ ✓
All enforceable contracts must include these
characteristics: offer and acceptance (agreement),
considerations, competent parties, and legal purpose.
Authority is not considered one of the elements of a legal
contract.
Each of the following would be an element in the definition
of fraud, except: ...... ANSWER ....... An individual
warrants a fact stated on the application✓ ✓
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A warranted fact is one guaranteed to be true. Although no
statement on an application is regarded as warranty, no
fraud is involved if a statement is guaranteed to be true.
Examples of Fraud ...... ANSWER ....... 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
A company that is licensed to sell insurance in a particular
state is: ...... ANSWER ....... An authorized Company✓ ✓
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✓ ✓
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An insurance contract is an aleatory contract. This means:
...... ANSWER ....... Equal value is not given by both
parties to the contract✓ ✓
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of
last resort for individuals or businesses that have been
rejected by voluntary market insurers. ...... ANSWER .......
Residual✓ ✓
To address adverse selection what can an insurer legally do?
...... ANSWER ....... Establish and enforce sound
underwriting practices✓ ✓
Underwriting helps to protect the insurer against adverse
selection and accepting risks that are more likely than
average to suffer losses.
A contract that is drafted by an insurer and receives no input
or alteration from the insured, is considered a(n): ......
ANSWER ....... Contract of Adhesion✓ ✓
ALABAMA LIFE & HEALTH INSURANCE EXAM
2026/2027 BANK COMPLETE CURRENT
TESTING QUESTION AND DETAILED CORRECT
ANSWER (VERIFIED) GUARANTEED PASS/TOP-
RATED A+.
LIFE & HEALTH INSURANCE
Maximize your success on the Alabama Life & Health Insurance
Exam by mastering key topics such as life insurance policies,
health and accident coverage, state regulations, ethics, and
underwriting principles. This exam ensures you understand both
product knowledge and legal responsibilities required for
licensure. It is designed for individuals pursuing licensure as life
and health insurance agents in Alabama.
Which of the following would be considered a speculative
risk? ...... ANSWER ....... The possibility the painting you
bought might be a long-lost masterpiece✓ ✓
A speculative risk is one in which there is a chance for either
loss or gain. Example: Gambling, Casino's, Lottery, etc. All of
the other choices describe pure risk, where there is no
chance of gain, only a chance of loss exists.
, Page 2 of 64
Which is the proper term for a company owned by its policy
owners? ...... ANSWER ....... A mutual insurance
company✓ ✓
A producer who is acting as an agent is representing: ......
ANSWER ....... Always the insurer✓ ✓
All of the following are elements of a contract, except: ......
ANSWER ....... Authority✓ ✓
All enforceable contracts must include these
characteristics: offer and acceptance (agreement),
considerations, competent parties, and legal purpose.
Authority is not considered one of the elements of a legal
contract.
Each of the following would be an element in the definition
of fraud, except: ...... ANSWER ....... An individual
warrants a fact stated on the application✓ ✓
, Page 3 of 64
A warranted fact is one guaranteed to be true. Although no
statement on an application is regarded as warranty, no
fraud is involved if a statement is guaranteed to be true.
Examples of Fraud ...... ANSWER ....... 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
A company that is licensed to sell insurance in a particular
state is: ...... ANSWER ....... An authorized Company✓ ✓
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✓ ✓
, Page 4 of 64
An insurance contract is an aleatory contract. This means:
...... ANSWER ....... Equal value is not given by both
parties to the contract✓ ✓
Aleatory: contract of unequal values exchanged
The ____________ market is a private source of coverage of
last resort for individuals or businesses that have been
rejected by voluntary market insurers. ...... ANSWER .......
Residual✓ ✓
To address adverse selection what can an insurer legally do?
...... ANSWER ....... Establish and enforce sound
underwriting practices✓ ✓
Underwriting helps to protect the insurer against adverse
selection and accepting risks that are more likely than
average to suffer losses.
A contract that is drafted by an insurer and receives no input
or alteration from the insured, is considered a(n): ......
ANSWER ....... Contract of Adhesion✓ ✓
