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Alabama Life & Health Insurance Exam
Questions with Detailed Verified Answers
(100% Correct Answers) /Already Graded
A+
Agent/Producer
Ans: A person who acts for another person or entity with regard to contractual arrangements
with third parties; a legal representative of an insurance company.
Agent/Agency Contract
Ans: a contract that is held between an insurer and an agent/producer, containing the
expressed authority given to the agent/producer, outlining the duties and responsibilities to
the principal. If the agent is in violation of the agency contract (or agreement), he or she may
be held personally liable to the insurer for breach of contract.
Applicant or Proposed Insured
Ans: A person who requests or seeks insurance from an insurer.
Beneficiary
Ans: the person who receives the benefits from the policy of insurance
Death Benefit
Ans: The amount paid when a claim is issued against a policy of insurance
Insurance Policy
Ans: a contract between a policyowner (and/or insured) and an insurance company which
agrees to pay the insured or the beneficiary for loss caused by specific events
Insured
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Ans: The person covered by the policy of insurance who may or may not be the applicant or
policy owner.
Insurer (principal)
Ans: a company that issues a policy of insurance
Life Insurance
Ans: a coverage upon a person's life, and granting, purchasing or disposing of annuities
Policyowner
Ans: the person entitled to exercise the rights and privileges in the policy and who may or
may not be the insured
Premium
Ans: the money paid to the insurance company for the policy of insurance
Insurance is the ________ of risk. Insureds' losses are transferred over to the
__________
Ans: transfer;insurer
Risk
Ans: The uncertainty or chance of a loss occurring.
Pure Risk
Ans: refers to situations that can only result in a loss or no change. No opportunity for
financial gain. Only type of risk that insurance companies are willing to accept.
Speculative risk
Ans: Involves the opportunity for either loss or gain. An example of speculative risk is
gambling. These types of risks are not insurable.
Only ____ risks are insurable
Ans: pure
Exposure
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Ans: A unit of measure used to determine rates charged for insurance coverage.
Hazards
Ans: Conditions or situations that increase the probability of an insured loss occurring.
Physical Hazard
Ans: individual characteristics that increase the chances of the cause of loss
Moral Hazard
Ans: tendencies towards increased risk. Involve evaluating the character and reputation of
the proposed insured
Morale Hazard
Ans: Similar to moral hazards, except that they arise from a state of mind that causes
indifference to loss, such as carelessness.
Perils
Ans: causes of loss insured against in an insurance policy
Life insurance
Ans: insures against the financial loss caused by the premature death of the insured
Health insurance
Ans: insures against the medical expenses and/or loss of income caused by the insured's
sickness or accidental injury
Property insurance
Ans: insures against the loss of physical property or the loss of its income-producing abilities
Casualty insurance
Ans: insures against the loss and/or damage of property and resulting liabilities
Loss
Click here for more: Preppass - Stuvia
Alabama Life & Health Insurance Exam
Questions with Detailed Verified Answers
(100% Correct Answers) /Already Graded
A+
Agent/Producer
Ans: A person who acts for another person or entity with regard to contractual arrangements
with third parties; a legal representative of an insurance company.
Agent/Agency Contract
Ans: a contract that is held between an insurer and an agent/producer, containing the
expressed authority given to the agent/producer, outlining the duties and responsibilities to
the principal. If the agent is in violation of the agency contract (or agreement), he or she may
be held personally liable to the insurer for breach of contract.
Applicant or Proposed Insured
Ans: A person who requests or seeks insurance from an insurer.
Beneficiary
Ans: the person who receives the benefits from the policy of insurance
Death Benefit
Ans: The amount paid when a claim is issued against a policy of insurance
Insurance Policy
Ans: a contract between a policyowner (and/or insured) and an insurance company which
agrees to pay the insured or the beneficiary for loss caused by specific events
Insured
,Page | 2
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Ans: The person covered by the policy of insurance who may or may not be the applicant or
policy owner.
Insurer (principal)
Ans: a company that issues a policy of insurance
Life Insurance
Ans: a coverage upon a person's life, and granting, purchasing or disposing of annuities
Policyowner
Ans: the person entitled to exercise the rights and privileges in the policy and who may or
may not be the insured
Premium
Ans: the money paid to the insurance company for the policy of insurance
Insurance is the ________ of risk. Insureds' losses are transferred over to the
__________
Ans: transfer;insurer
Risk
Ans: The uncertainty or chance of a loss occurring.
Pure Risk
Ans: refers to situations that can only result in a loss or no change. No opportunity for
financial gain. Only type of risk that insurance companies are willing to accept.
Speculative risk
Ans: Involves the opportunity for either loss or gain. An example of speculative risk is
gambling. These types of risks are not insurable.
Only ____ risks are insurable
Ans: pure
Exposure
, Page | 3
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Ans: A unit of measure used to determine rates charged for insurance coverage.
Hazards
Ans: Conditions or situations that increase the probability of an insured loss occurring.
Physical Hazard
Ans: individual characteristics that increase the chances of the cause of loss
Moral Hazard
Ans: tendencies towards increased risk. Involve evaluating the character and reputation of
the proposed insured
Morale Hazard
Ans: Similar to moral hazards, except that they arise from a state of mind that causes
indifference to loss, such as carelessness.
Perils
Ans: causes of loss insured against in an insurance policy
Life insurance
Ans: insures against the financial loss caused by the premature death of the insured
Health insurance
Ans: insures against the medical expenses and/or loss of income caused by the insured's
sickness or accidental injury
Property insurance
Ans: insures against the loss of physical property or the loss of its income-producing abilities
Casualty insurance
Ans: insures against the loss and/or damage of property and resulting liabilities
Loss
