LIFE AND HEALTH INSURANCE EXAM
WITH UPDATED QUESTIONS AND
ANSWERS 2025/2026
UNIT 1: The term used to describe the individual who is covered by the insurance is
A. insurer
B. insured
C. policyowner
D. risk - CORRECT ANSWERS -B
Which of the following is a risk?
A. A car may need to have new brakes installed after several years of regular driving.
B. An individual may need medical attention after slipping on the ice and falling.
C. Both are examples of risk.
D. Neither is an example of risk. - CORRECT ANSWERS -B
The estimation of future losses is more accurate when information is from
A. a small select group
B. a large group
C. a medium-sized group
D. any size group; group size does not matter - CORRECT ANSWERS -A
The application of the law of large numbers enables insurers to
A. estimate the future losses of a class or group of people
B. predict the future losses of speci c individuals
,C. charge higher premiums for insurance
D. calculate mortality charges - CORRECT ANSWERS -B
Which type of policy is designed to protect against the risk of living too long?
A. Casualty
B. Life
C. Annuity
D. Medical expense - CORRECT ANSWERS -C
Which of the following is a type of insurance company owned by its shareholders?
A. Mutual B. Stock
C. Lloyd's D. Reinsurer - CORRECT ANSWERS -B
The ZYX Insurance Company is incorporated in Alabama. While doing business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - CORRECT ANSWERS -B
The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - CORRECT ANSWERS -C
Self-insurance is an example of which method of handling risk?
A. Acceptance B. Transference C. Avoidance D. Reduction - CORRECT ANSWERS -A
Which of the following terms is used to denote insurance companies?
A. Broker
B. Exchange C. Corporation D. Insurer - CORRECT ANSWERS -D
,A social device for spreading the chance of financial loss among a large number of people is the
definition of
A. hazard
B. risk
C. insurance
D. peril - CORRECT ANSWERS -C
Which of the following risks is most likely to be
insurable?
A. George is concerned about the financial impact his premature death would have on his family.
B. Talyn is concerned about the financial impact large betting losses at the horse track will have on his
retirement savings.
C. John is concerned about the financial impact on his savings when his car eventually becomes worn
enough to need to be replaced.
D. Jewel is concerned about the nancial effect losing her hat would have on her weekly spending money.
- CORRECT ANSWERS -A
Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash by
A. reduction B. avoidance C. transference D. retention - CORRECT ANSWERS -B
Chianna becomes injured in a car accident caused when she took her eyes off the road to answer her
cell phone. This is an example of
A. a physical hazard
B. a moral hazard
C. a morale hazard
D. a legal hazard - CORRECT ANSWERS -C
, An arrangement in which an insurer transfers part of the insurance risk to another insurance company is
known as
A. avoidance
B. fraud
C. Lloyd's associations
D. reinsurance - CORRECT ANSWERS -D
Which of the following is NOT an example of insurable interest?
A. Jose wishes to take out a life insurance policy on his own life to provide for his family in the event of
his death.
B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral costs will be
covered when the time comes.
C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a careless driver
and Juan thinks his neighbor is likely to die in a car accident.
D. Carla wishes to take out a life insurance policy on her best salesperson to protect the business from
lost sales in the event of the salesperson's death. - CORRECT ANSWERS -C
Kim is injured in a house fire. When the bills come, the insurance company pays 80% of the cost, and
Kim pays the rest. This is an example of
A. coinsurance
B. a deductible
C. extraneous insurance D. policy limits - CORRECT ANSWERS -A
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
A. a stock insurer
B. a mutual insurer C. a nonpro t insurer D. a fraternal insurer - CORRECT ANSWERS -B
WITH UPDATED QUESTIONS AND
ANSWERS 2025/2026
UNIT 1: The term used to describe the individual who is covered by the insurance is
A. insurer
B. insured
C. policyowner
D. risk - CORRECT ANSWERS -B
Which of the following is a risk?
A. A car may need to have new brakes installed after several years of regular driving.
B. An individual may need medical attention after slipping on the ice and falling.
C. Both are examples of risk.
D. Neither is an example of risk. - CORRECT ANSWERS -B
The estimation of future losses is more accurate when information is from
A. a small select group
B. a large group
C. a medium-sized group
D. any size group; group size does not matter - CORRECT ANSWERS -A
The application of the law of large numbers enables insurers to
A. estimate the future losses of a class or group of people
B. predict the future losses of speci c individuals
,C. charge higher premiums for insurance
D. calculate mortality charges - CORRECT ANSWERS -B
Which type of policy is designed to protect against the risk of living too long?
A. Casualty
B. Life
C. Annuity
D. Medical expense - CORRECT ANSWERS -C
Which of the following is a type of insurance company owned by its shareholders?
A. Mutual B. Stock
C. Lloyd's D. Reinsurer - CORRECT ANSWERS -B
The ZYX Insurance Company is incorporated in Alabama. While doing business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - CORRECT ANSWERS -B
The ZYX Insurance Company is incorporated in Mexico. While doing business in Texas, it is
A. adomesticinsurer B. a foreign insurer C. an alien insurer D. an export insurer - CORRECT ANSWERS -C
Self-insurance is an example of which method of handling risk?
A. Acceptance B. Transference C. Avoidance D. Reduction - CORRECT ANSWERS -A
Which of the following terms is used to denote insurance companies?
A. Broker
B. Exchange C. Corporation D. Insurer - CORRECT ANSWERS -D
,A social device for spreading the chance of financial loss among a large number of people is the
definition of
A. hazard
B. risk
C. insurance
D. peril - CORRECT ANSWERS -C
Which of the following risks is most likely to be
insurable?
A. George is concerned about the financial impact his premature death would have on his family.
B. Talyn is concerned about the financial impact large betting losses at the horse track will have on his
retirement savings.
C. John is concerned about the financial impact on his savings when his car eventually becomes worn
enough to need to be replaced.
D. Jewel is concerned about the nancial effect losing her hat would have on her weekly spending money.
- CORRECT ANSWERS -A
Roger refuses to travel by airplane. Roger is managing the risk of being in a plane crash by
A. reduction B. avoidance C. transference D. retention - CORRECT ANSWERS -B
Chianna becomes injured in a car accident caused when she took her eyes off the road to answer her
cell phone. This is an example of
A. a physical hazard
B. a moral hazard
C. a morale hazard
D. a legal hazard - CORRECT ANSWERS -C
, An arrangement in which an insurer transfers part of the insurance risk to another insurance company is
known as
A. avoidance
B. fraud
C. Lloyd's associations
D. reinsurance - CORRECT ANSWERS -D
Which of the following is NOT an example of insurable interest?
A. Jose wishes to take out a life insurance policy on his own life to provide for his family in the event of
his death.
B. Ana wishes to take out a life insurance policy on her mother to ensure that funeral costs will be
covered when the time comes.
C. Juan wishes to take out a life insurance policy on his neighbor because his neighbor is a careless driver
and Juan thinks his neighbor is likely to die in a car accident.
D. Carla wishes to take out a life insurance policy on her best salesperson to protect the business from
lost sales in the event of the salesperson's death. - CORRECT ANSWERS -C
Kim is injured in a house fire. When the bills come, the insurance company pays 80% of the cost, and
Kim pays the rest. This is an example of
A. coinsurance
B. a deductible
C. extraneous insurance D. policy limits - CORRECT ANSWERS -A
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
A. a stock insurer
B. a mutual insurer C. a nonpro t insurer D. a fraternal insurer - CORRECT ANSWERS -B
