Comprehensive Questions (Frequently
Tested) with Verified Answers
Shirley is financially responsible for her minor children but has never owned life insurance. She
wants to purchase life insurance after being diangosed with a possibly terminal disease. Which
of the following characterizes her desire to purchase life insurance?
a. clean sheeting
b. warehousing
c. material misrepresentation
d. adverse selection - Answer: d. adverse selection
Arthur is concerned that flying on a commercial airliner exposes him to the risk that he will be
injured or killed in an aircraft accident. He manages that risk by choosing other modes of
transportation. What is this method of risk management?
a. risk transfer
b. risk reduction
c. risk avoidance
d. risk assumption - Answer: c. risk avoidance
Insurance policies are offered to proposed insured on a "take it or leave it" basis, giving them no
ability to negotiate terms or price which term describes this feature of insurance contracts.
A. Adhesion
B. Aleatory
C. Unilateral
D. Commutative - Answer: A. Adhesion