©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Oklahoma Insurance Exam: Life & Health –
Introduction Exam Questions With Verified
Answers
Insurance - Answers✔A contract that indemnifies another against loss, damage, or liability
arising from an unknown event.
Indemnify - Answers✔Make a person whole by restoring that person to the same financial
position that existed before the loss.
What is the basic principle of all insurance. - Answers✔Transfer of risk is the basic principle of
all insurance. By purchasing insurance, a person shares risk with a group of others, reducing the
individual potential for disastrous financial consequences.
policyowner - Answers✔The insured
premium - Answers✔A set amount of money paid to the insurance company (The Insurer)
benefit - Answers✔A set sum paid by the insurer upon the occurrence of some event.
insured - Answers✔The person who is covered by the insurance
policy - Answers✔The agreement between the insurer and the insured, the person who is covered
by the insurance, is established in a legal document referred to as a contract of insurance
Loss - Answers✔Reduction in the value of an asset.
claim - Answers✔Demand for payment of the insurance benefit to the person named in the
policy
Risk - Answers✔Uncertainty of financial loss, or the chance of loss, when more than one
outcome is possible.
It involves two things: a possibility of loss and an uncertainty about whether the loss will occur.
What are the two types of risks? - Answers✔Pure risk
1
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Speculative risk
Pure risk
Give example - Answers✔There is only a chance of loss—the loss may or may not happen—and
there is no possibility for gain. Only pure risk is insurable.
EX. The risk associated with the chance of an accident is an example of pure risk. Only pure risk
is insurable.
Speculative risk
Give example - Answers✔Involves both an uncertainty of loss and of gain. Insurance does not
protect individuals against losses arising out of speculative risk because these risks are
undertaken voluntarily.
EX Betting at the race track and investing in the stock market are examples of uninsurable risk.
Peril
Give example - Answers✔The immediate specific event causing loss and giving rise to risk. It is
the cause of a risk.
EX when a building burns, fire is the peril. When a person dies, death is the peril.
Hazard - Answers✔Is any factor that gives rise to a peril. For purposes of life insurance, there are
three basic types of hazards: physical, moral, and morale.
What are the Three Basic Hazards - Answers✔Physical, moral, and morale.
Physical hazards - Answers✔Material, structural, or operational features of a risk situation
(slippery floors or unsanitary conditions would be physical hazards).
Moral hazards - Answers✔People's habits and values (filing a false claim is an example of moral
hazard).
Morale hazard - Answers✔Human carelessness or irresponsibility (failing to take safety
precautions is an example of morale hazard).
What is the "Managing Risk Acronym" - Answers✔STARR
2
ALL RIGHTS RESERVED.
Oklahoma Insurance Exam: Life & Health –
Introduction Exam Questions With Verified
Answers
Insurance - Answers✔A contract that indemnifies another against loss, damage, or liability
arising from an unknown event.
Indemnify - Answers✔Make a person whole by restoring that person to the same financial
position that existed before the loss.
What is the basic principle of all insurance. - Answers✔Transfer of risk is the basic principle of
all insurance. By purchasing insurance, a person shares risk with a group of others, reducing the
individual potential for disastrous financial consequences.
policyowner - Answers✔The insured
premium - Answers✔A set amount of money paid to the insurance company (The Insurer)
benefit - Answers✔A set sum paid by the insurer upon the occurrence of some event.
insured - Answers✔The person who is covered by the insurance
policy - Answers✔The agreement between the insurer and the insured, the person who is covered
by the insurance, is established in a legal document referred to as a contract of insurance
Loss - Answers✔Reduction in the value of an asset.
claim - Answers✔Demand for payment of the insurance benefit to the person named in the
policy
Risk - Answers✔Uncertainty of financial loss, or the chance of loss, when more than one
outcome is possible.
It involves two things: a possibility of loss and an uncertainty about whether the loss will occur.
What are the two types of risks? - Answers✔Pure risk
1
, ©THEBRIGHT EXAM SOLUTIONS 2024/2025
ALL RIGHTS RESERVED.
Speculative risk
Pure risk
Give example - Answers✔There is only a chance of loss—the loss may or may not happen—and
there is no possibility for gain. Only pure risk is insurable.
EX. The risk associated with the chance of an accident is an example of pure risk. Only pure risk
is insurable.
Speculative risk
Give example - Answers✔Involves both an uncertainty of loss and of gain. Insurance does not
protect individuals against losses arising out of speculative risk because these risks are
undertaken voluntarily.
EX Betting at the race track and investing in the stock market are examples of uninsurable risk.
Peril
Give example - Answers✔The immediate specific event causing loss and giving rise to risk. It is
the cause of a risk.
EX when a building burns, fire is the peril. When a person dies, death is the peril.
Hazard - Answers✔Is any factor that gives rise to a peril. For purposes of life insurance, there are
three basic types of hazards: physical, moral, and morale.
What are the Three Basic Hazards - Answers✔Physical, moral, and morale.
Physical hazards - Answers✔Material, structural, or operational features of a risk situation
(slippery floors or unsanitary conditions would be physical hazards).
Moral hazards - Answers✔People's habits and values (filing a false claim is an example of moral
hazard).
Morale hazard - Answers✔Human carelessness or irresponsibility (failing to take safety
precautions is an example of morale hazard).
What is the "Managing Risk Acronym" - Answers✔STARR
2
