NM Life, accident, and Health Insurance
EXAM PREP 2026/2027 ACCURATE QUESTIONS
WITH VERIFIED CORRECT ANSWERS ||
100% GUARANTEED PASS
<BRAND NEW VERSION>
1. The role of insurance - ANSWER To transfer the risk of financial loss from
an individual or business to an insurance company
2. Life insurance guarantees what - ANSWER A specific sum of money when
someone dies
3. Health insurance provides what - ANSWER Funds to cover medical bills
and loss of money due to disability
4. Annuities provide what - ANSWER A stream of income by making a series
of payments over a certain period of time
5. Private insurance - ANSWER Known as commercial insurance companies.
Funded through premiums and sell insurance for a profit.
6. Government insurance - ANSWER Funded with taxes and serve national
and state social purposes
7. Stock Insurance Company - ANSWER Owned by stockholders, issues
nonparticipating policies.
,8. Mutual Insurer - ANSWER An insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them.
9. Mutualization occurs when:
Select one:
a. A mutual insurer becomes a stock insurer
b. A stock insurer becomes a mutual insurer
c. A nonprofit insurer becomes a mutual insurer
d. A nonprofit insurer becomes a stock insurer - ANSWER B
10.Demutualization - ANSWER The process of a mutual company being
converted into a stock company.
11.All of the following are true regarding the insurable interest creditors have in
the lives of their debtors, EXCEPT:
Select one:
a. Creditors may take out life insurance on the lives of debtors.
b. Creditors may take out life insurance on the lives of debtors in an
amount equal to the unpaid debt.
c. Creditors must have debtors, consent to take out life insurance
policies on them.
d. The face amount of life insurance on debtors stays constant
throughout the policy term. - ANSWER d
12.The Social Security blackout period begins when the youngest child reaches
the age of:
Select one:
a. 16
b. 18
c. 19
d. 21 - ANSWER a
,13.Exposure - ANSWER unit of measurement used to determine rates charged
for insurance coverage.
14.What factors are considered in determining rates? - ANSWER -Age of
insured
- Medical History
- Occupation
- Sex
15.What does homogeneous mean in insurance? - ANSWER large number of
units having the same or similar exposure to loss.
16.Hazard - ANSWER conditions or situation that increase the probability of an
injured loss occurring.
17.Physical Hazards - ANSWER individual characteristics that increase the
chances of the cause of loss. (physical condition, past medical history).
18.What kind of hazards are there? - ANSWER - Physical
- Moral
- Morale
19.Moral Hazards - ANSWER Tendencies towards increased risk (i.e.
character/reputation of the insured party)
20.Morale Hazards - ANSWER arise from the state of mind that causes
indifference to loss such as carelessness
, 21.Perils - ANSWER Causes of loss insured against in an insurance policy.
22.Life Insurance - ANSWER Insures against the financial loss caused by the
premature death of the insured.
23.Health Insurance - ANSWER Insures against the medical expenses or loss of
income caused by the insured's sickness or accidental injury
24.Property Insurance - ANSWER insures against the loss of physical property
or the loss of its income-producing abilities
25.Casualty Insurace - ANSWER insures against the loss/damage of property
and resulting liabilities
26.Loss - ANSWER The reduction, decrease, or disappearance of value of the
person or property insured in a policy, caused by a named peril.
27.Indemnity Insurance - ANSWER restores to the same financial position
28.Methods of Handling Risk - ANSWER Avoidance - avoid it
Retention- the planned assumption of risk by the insured party
Sharing - multiple people
Reduction - lessen possibility or severity of a loss
Transfer - loss borne by another party
29.Purpose of Risk Retention - ANSWER 1. Reduce expenses and improve
cash flow
2. Increase control of claim reserving and claims settlements
3. To fun for losses that cannot be insured
EXAM PREP 2026/2027 ACCURATE QUESTIONS
WITH VERIFIED CORRECT ANSWERS ||
100% GUARANTEED PASS
<BRAND NEW VERSION>
1. The role of insurance - ANSWER To transfer the risk of financial loss from
an individual or business to an insurance company
2. Life insurance guarantees what - ANSWER A specific sum of money when
someone dies
3. Health insurance provides what - ANSWER Funds to cover medical bills
and loss of money due to disability
4. Annuities provide what - ANSWER A stream of income by making a series
of payments over a certain period of time
5. Private insurance - ANSWER Known as commercial insurance companies.
Funded through premiums and sell insurance for a profit.
6. Government insurance - ANSWER Funded with taxes and serve national
and state social purposes
7. Stock Insurance Company - ANSWER Owned by stockholders, issues
nonparticipating policies.
,8. Mutual Insurer - ANSWER An insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them.
9. Mutualization occurs when:
Select one:
a. A mutual insurer becomes a stock insurer
b. A stock insurer becomes a mutual insurer
c. A nonprofit insurer becomes a mutual insurer
d. A nonprofit insurer becomes a stock insurer - ANSWER B
10.Demutualization - ANSWER The process of a mutual company being
converted into a stock company.
11.All of the following are true regarding the insurable interest creditors have in
the lives of their debtors, EXCEPT:
Select one:
a. Creditors may take out life insurance on the lives of debtors.
b. Creditors may take out life insurance on the lives of debtors in an
amount equal to the unpaid debt.
c. Creditors must have debtors, consent to take out life insurance
policies on them.
d. The face amount of life insurance on debtors stays constant
throughout the policy term. - ANSWER d
12.The Social Security blackout period begins when the youngest child reaches
the age of:
Select one:
a. 16
b. 18
c. 19
d. 21 - ANSWER a
,13.Exposure - ANSWER unit of measurement used to determine rates charged
for insurance coverage.
14.What factors are considered in determining rates? - ANSWER -Age of
insured
- Medical History
- Occupation
- Sex
15.What does homogeneous mean in insurance? - ANSWER large number of
units having the same or similar exposure to loss.
16.Hazard - ANSWER conditions or situation that increase the probability of an
injured loss occurring.
17.Physical Hazards - ANSWER individual characteristics that increase the
chances of the cause of loss. (physical condition, past medical history).
18.What kind of hazards are there? - ANSWER - Physical
- Moral
- Morale
19.Moral Hazards - ANSWER Tendencies towards increased risk (i.e.
character/reputation of the insured party)
20.Morale Hazards - ANSWER arise from the state of mind that causes
indifference to loss such as carelessness
, 21.Perils - ANSWER Causes of loss insured against in an insurance policy.
22.Life Insurance - ANSWER Insures against the financial loss caused by the
premature death of the insured.
23.Health Insurance - ANSWER Insures against the medical expenses or loss of
income caused by the insured's sickness or accidental injury
24.Property Insurance - ANSWER insures against the loss of physical property
or the loss of its income-producing abilities
25.Casualty Insurace - ANSWER insures against the loss/damage of property
and resulting liabilities
26.Loss - ANSWER The reduction, decrease, or disappearance of value of the
person or property insured in a policy, caused by a named peril.
27.Indemnity Insurance - ANSWER restores to the same financial position
28.Methods of Handling Risk - ANSWER Avoidance - avoid it
Retention- the planned assumption of risk by the insured party
Sharing - multiple people
Reduction - lessen possibility or severity of a loss
Transfer - loss borne by another party
29.Purpose of Risk Retention - ANSWER 1. Reduce expenses and improve
cash flow
2. Increase control of claim reserving and claims settlements
3. To fun for losses that cannot be insured
