Utah Life and Health Insurance Core Exam Set 2025/2026 —
200 Practice Questions with Answer Key & Explanations
1. Which of the following best describes pure risk?
A) A chance of loss or gain
B) A chance of loss or no loss, but no chance of gain
C) A chance of gain only
D) A speculative investment with uncertain outcome
Correct Answer: B
Explanation: Pure risk is the only type of risk that is insurable. It involves either a loss or no loss at all,
with no possibility of gain. Speculative risk, such as gambling or investing, involves a chance of gain and
is NOT insurable.
2. What type of hazard is indicated when an applicant knowingly lies on an insurance application?
A) Physical hazard
B) Moral hazard
C) Morale hazard
D) Legal hazard
Correct Answer: B
Explanation: A moral hazard involves dishonesty or character defects that increase the likelihood or
severity of a loss. Lying on an application is a classic example of moral hazard. Physical hazards relate to
tangible conditions; morale hazards involve carelessness or indifference.
3. Which of the following is NOT a requirement for a risk to be insurable?
A) The loss must be due to chance
B) The loss must be definite and measurable
C) The loss must be catastrophic in nature
D) The loss exposure must be part of a large group of similar risks
,Correct Answer: C
Explanation: For a risk to be insurable, it must NOT be catastrophic to the insurer. The insurer must be
able to spread risk across many policies. Losses that are catastrophic (e.g., widespread nuclear event)
are typically excluded.
4. An insurance company that is incorporated outside the United States is called a(n):
A) Domestic insurer
B) Foreign insurer
C) Alien insurer
D) Non-admitted insurer
Correct Answer: C
Explanation: An alien insurer is incorporated in a country other than the United States. A domestic
insurer is incorporated in the same state where it does business; a foreign insurer is incorporated in a
different US state.
5. Who owns a mutual insurance company?
A) Stockholders
B) Policyowners
C) Board of directors
D) The state insurance department
Correct Answer: B
Explanation: Mutual insurance companies are owned by their policyowners, not outside stockholders.
Policyowners may receive dividends, though dividends are never guaranteed. Stock companies are
owned by stockholders.
6. Under what condition would a non‑resident applicant be exempt from taking the Utah insurance
exam?
A) They have held a license in any state for at least 2 years
,B) They have been licensed for the same line of authority in another state and apply within 90 days of
establishing legal residence in Utah
C) They have a bachelor's degree in insurance
D) They have been a resident of Utah for more than 10 years
Correct Answer: B
Explanation: Utah law (31A‑23a‑108) waives the examination for a non‑resident applicant who applies
within 90 days of establishing legal residence in Utah, has been licensed for the same line of authority in
another state, and was in good standing at the time of cancellation.
7. An applicant for a Utah insurance license must submit fingerprints to obtain a criminal history record.
After passing the exam, the license application and fee must be submitted within:
A) 30 days
B) 60 days
C) 90 days
D) 120 days
Correct Answer: C
Explanation: Utah requires that the license application and fee be submitted within 90 days of passing
the exam. If more than 90 days elapse, the exam must be retaken before a license can be issued.
8. A life insurance policy that pays a benefit if the insured dies as the result of an accident, typically
double the face amount, is known as:
A) Accidental death benefit (ADB) rider
B) Waiver of premium rider
C) Accelerated benefit rider
D) Guaranteed insurability rider
Correct Answer: A
Explanation: The Accidental Death Benefit (ADB) rider, often called double indemnity, pays an additional
benefit (usually equal to the face amount) if the insured dies as the result of an accident, generally
within 90 days of the accident.
, 9. Which type of annuity pays periodic payments only for the lifetime of the annuitant, with no further
payments after the annuitant's death?
A) Life annuity with period certain
B) Life only annuity (straight life)
C) Joint and survivor annuity
D) Refund life annuity
Correct Answer: B
Explanation: A straight life (life only) annuity provides the highest periodic payment because it
guarantees payments only during the annuitant's lifetime. If the annuitant dies early, there is no refund
or further payments to beneficiaries.
10. The tendency of poorer‑than‑average risks to seek or purchase insurance more often than standard
risks is known as:
A) Moral hazard
B) Adverse selection
C) Reinsurance
D) Risk retention
Correct Answer: B
Explanation: Adverse selection occurs when individuals with higher risk (e.g., those already sick) are
more likely to buy insurance. Insurers use underwriting to guard against adverse selection.
11. What is the free‑look period for life insurance policies in Utah?
A) 10 days
B) 15 days
C) 20 days
D) 30 days
200 Practice Questions with Answer Key & Explanations
1. Which of the following best describes pure risk?
A) A chance of loss or gain
B) A chance of loss or no loss, but no chance of gain
C) A chance of gain only
D) A speculative investment with uncertain outcome
Correct Answer: B
Explanation: Pure risk is the only type of risk that is insurable. It involves either a loss or no loss at all,
with no possibility of gain. Speculative risk, such as gambling or investing, involves a chance of gain and
is NOT insurable.
2. What type of hazard is indicated when an applicant knowingly lies on an insurance application?
A) Physical hazard
B) Moral hazard
C) Morale hazard
D) Legal hazard
Correct Answer: B
Explanation: A moral hazard involves dishonesty or character defects that increase the likelihood or
severity of a loss. Lying on an application is a classic example of moral hazard. Physical hazards relate to
tangible conditions; morale hazards involve carelessness or indifference.
3. Which of the following is NOT a requirement for a risk to be insurable?
A) The loss must be due to chance
B) The loss must be definite and measurable
C) The loss must be catastrophic in nature
D) The loss exposure must be part of a large group of similar risks
,Correct Answer: C
Explanation: For a risk to be insurable, it must NOT be catastrophic to the insurer. The insurer must be
able to spread risk across many policies. Losses that are catastrophic (e.g., widespread nuclear event)
are typically excluded.
4. An insurance company that is incorporated outside the United States is called a(n):
A) Domestic insurer
B) Foreign insurer
C) Alien insurer
D) Non-admitted insurer
Correct Answer: C
Explanation: An alien insurer is incorporated in a country other than the United States. A domestic
insurer is incorporated in the same state where it does business; a foreign insurer is incorporated in a
different US state.
5. Who owns a mutual insurance company?
A) Stockholders
B) Policyowners
C) Board of directors
D) The state insurance department
Correct Answer: B
Explanation: Mutual insurance companies are owned by their policyowners, not outside stockholders.
Policyowners may receive dividends, though dividends are never guaranteed. Stock companies are
owned by stockholders.
6. Under what condition would a non‑resident applicant be exempt from taking the Utah insurance
exam?
A) They have held a license in any state for at least 2 years
,B) They have been licensed for the same line of authority in another state and apply within 90 days of
establishing legal residence in Utah
C) They have a bachelor's degree in insurance
D) They have been a resident of Utah for more than 10 years
Correct Answer: B
Explanation: Utah law (31A‑23a‑108) waives the examination for a non‑resident applicant who applies
within 90 days of establishing legal residence in Utah, has been licensed for the same line of authority in
another state, and was in good standing at the time of cancellation.
7. An applicant for a Utah insurance license must submit fingerprints to obtain a criminal history record.
After passing the exam, the license application and fee must be submitted within:
A) 30 days
B) 60 days
C) 90 days
D) 120 days
Correct Answer: C
Explanation: Utah requires that the license application and fee be submitted within 90 days of passing
the exam. If more than 90 days elapse, the exam must be retaken before a license can be issued.
8. A life insurance policy that pays a benefit if the insured dies as the result of an accident, typically
double the face amount, is known as:
A) Accidental death benefit (ADB) rider
B) Waiver of premium rider
C) Accelerated benefit rider
D) Guaranteed insurability rider
Correct Answer: A
Explanation: The Accidental Death Benefit (ADB) rider, often called double indemnity, pays an additional
benefit (usually equal to the face amount) if the insured dies as the result of an accident, generally
within 90 days of the accident.
, 9. Which type of annuity pays periodic payments only for the lifetime of the annuitant, with no further
payments after the annuitant's death?
A) Life annuity with period certain
B) Life only annuity (straight life)
C) Joint and survivor annuity
D) Refund life annuity
Correct Answer: B
Explanation: A straight life (life only) annuity provides the highest periodic payment because it
guarantees payments only during the annuitant's lifetime. If the annuitant dies early, there is no refund
or further payments to beneficiaries.
10. The tendency of poorer‑than‑average risks to seek or purchase insurance more often than standard
risks is known as:
A) Moral hazard
B) Adverse selection
C) Reinsurance
D) Risk retention
Correct Answer: B
Explanation: Adverse selection occurs when individuals with higher risk (e.g., those already sick) are
more likely to buy insurance. Insurers use underwriting to guard against adverse selection.
11. What is the free‑look period for life insurance policies in Utah?
A) 10 days
B) 15 days
C) 20 days
D) 30 days
