Utah Life and Health Insurance Exam Prep 2026 | 200 Practice
Questions & Detailed Answers | Verified Answers with
Rationales | Practice Exam | Pass Your Insurance Exam
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) Nonadmitted 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 U.S. 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. What is the minimum score required to pass the Utah insurance examination?
A) 60%
B) 65%
C) 70%
D) 75%
Correct Answer: C
Explanation: In order to pass the Utah insurance examination, you must achieve a minimum score of
70%.
7. Which of the following is an example of a producer's fiduciary responsibility?
A) Recommending suitable policies to clients
B) Collecting premiums and paying them to the insurance company
C) Explaining policy provisions to applicants
D) Completing continuing education requirements
Correct Answer: B
, Explanation: A fiduciary responsibility involves handling money or property in a position of trust.
Collecting premiums and paying them to the insurance company is a key fiduciary duty of insurance
producers.
8. What makes an insurance policy a unilateral contract?
A) Both parties are legally bound to perform
B) Only the insurer is legally bound
C) Only the insured is legally bound
D) Neither party is legally bound
Correct Answer: B
Explanation: An insurance policy is a unilateral contract because only the insurer is legally bound to
perform. The insured makes no legally binding promise to pay premiums; if premiums are not paid, the
insurer simply does not have to pay claims.
9. How often must the commissioner examine each domestic insurance company in Utah?
A) Every 2 years
B) Every 3 years
C) Every 5 years
D) Every 10 years
Correct Answer: C
Explanation: The commissioner must examine each domestic insurance company every 5 years to
ensure financial solvency and compliance with state regulations.
Questions & Detailed Answers | Verified Answers with
Rationales | Practice Exam | Pass Your Insurance Exam
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) Nonadmitted 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 U.S. 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. What is the minimum score required to pass the Utah insurance examination?
A) 60%
B) 65%
C) 70%
D) 75%
Correct Answer: C
Explanation: In order to pass the Utah insurance examination, you must achieve a minimum score of
70%.
7. Which of the following is an example of a producer's fiduciary responsibility?
A) Recommending suitable policies to clients
B) Collecting premiums and paying them to the insurance company
C) Explaining policy provisions to applicants
D) Completing continuing education requirements
Correct Answer: B
, Explanation: A fiduciary responsibility involves handling money or property in a position of trust.
Collecting premiums and paying them to the insurance company is a key fiduciary duty of insurance
producers.
8. What makes an insurance policy a unilateral contract?
A) Both parties are legally bound to perform
B) Only the insurer is legally bound
C) Only the insured is legally bound
D) Neither party is legally bound
Correct Answer: B
Explanation: An insurance policy is a unilateral contract because only the insurer is legally bound to
perform. The insured makes no legally binding promise to pay premiums; if premiums are not paid, the
insurer simply does not have to pay claims.
9. How often must the commissioner examine each domestic insurance company in Utah?
A) Every 2 years
B) Every 3 years
C) Every 5 years
D) Every 10 years
Correct Answer: C
Explanation: The commissioner must examine each domestic insurance company every 5 years to
ensure financial solvency and compliance with state regulations.
