PA Life, Accident, & Health Insurance
Exam questions and answers 2025\2026
A+ Grade
Insurance
- correct answer defined as the transfer of PURE risk to the insurance company in consideration for a
premium.
The chance of loss without any chance of gain is called
- correct answer pure risk
Speculative risk
- correct answer has the possibility for gain or loss and is not insurable.
Risk is defined as the
- correct answer chance of loss.
A condition that could result in a loss is known as an
- correct answer exposure
A hazard is something that increases
- correct answer the chance of loss.
The presence of a physical hazard
- correct answer increases the chance of a loss occurring.
A peril is
- correct answer defined as a cause of loss, such as fire.
,To be insurable,
- correct answer losses must be calculable.
The law of large numbers
- correct answer allows insurers to predict claims more accurately.
The law of large numbers applies to
- correct answer groups of people, not to individuals.
The more people in the group,
- correct answer the more accurate the predictions are.
Most insurers buy reinsurance
- correct answer to protect themselves in the event of a catastrophic loss.
Insurance laws are not required
- correct answer to be uniform from one state to another.
A stock insurer
- correct answer may pay dividends to its shareholders (stockholders), but they may not be guaranteed.
A reciprocal insurance company is managed by an
- correct answer attorney-in-fact.
An unincorporated association of individuals who insure each other is known as
- correct answer a reciprocal insurer.
The government offers insurance primarily based upon
- correct answer social needs, such as flood insurance and workers compensation, but does not offer
insurance for the purpose of preventing fraud.
A foreign company
- correct answer has their home office in another state.
, An insurer incorporated outside of the U.S. who sells in the U.S. is
- correct answer an alien company.
A producer may be personally liable when
- correct answer violating the producer's contract.
Producers represent
- correct answer the insurance company, not the insured.
Independent producers
- correct answer own their own accounts and are not insurance company employees.
Producers have
- correct answer express, implied and apparent authority.
The authority a producer
- correct answer has that is written in his or her contract is known as express authority.
A producer's binding authority (if any)
- correct answer is expressed (written down) in the producer's contract with the insurer the producer
represents.
The authority not expressly (written) granted,
- correct answer but is actual authority the producer has to transact normal business activities, is known
as implied authority.
The elements of a legal contract may be remembered
- correct answer by the acronym C-O-A-L (consideration, offer, acceptance, legal purpose and legal
capacity).
A requirement for a valid contract
- correct answer is offer and acceptance, or mutual agreement.
Exam questions and answers 2025\2026
A+ Grade
Insurance
- correct answer defined as the transfer of PURE risk to the insurance company in consideration for a
premium.
The chance of loss without any chance of gain is called
- correct answer pure risk
Speculative risk
- correct answer has the possibility for gain or loss and is not insurable.
Risk is defined as the
- correct answer chance of loss.
A condition that could result in a loss is known as an
- correct answer exposure
A hazard is something that increases
- correct answer the chance of loss.
The presence of a physical hazard
- correct answer increases the chance of a loss occurring.
A peril is
- correct answer defined as a cause of loss, such as fire.
,To be insurable,
- correct answer losses must be calculable.
The law of large numbers
- correct answer allows insurers to predict claims more accurately.
The law of large numbers applies to
- correct answer groups of people, not to individuals.
The more people in the group,
- correct answer the more accurate the predictions are.
Most insurers buy reinsurance
- correct answer to protect themselves in the event of a catastrophic loss.
Insurance laws are not required
- correct answer to be uniform from one state to another.
A stock insurer
- correct answer may pay dividends to its shareholders (stockholders), but they may not be guaranteed.
A reciprocal insurance company is managed by an
- correct answer attorney-in-fact.
An unincorporated association of individuals who insure each other is known as
- correct answer a reciprocal insurer.
The government offers insurance primarily based upon
- correct answer social needs, such as flood insurance and workers compensation, but does not offer
insurance for the purpose of preventing fraud.
A foreign company
- correct answer has their home office in another state.
, An insurer incorporated outside of the U.S. who sells in the U.S. is
- correct answer an alien company.
A producer may be personally liable when
- correct answer violating the producer's contract.
Producers represent
- correct answer the insurance company, not the insured.
Independent producers
- correct answer own their own accounts and are not insurance company employees.
Producers have
- correct answer express, implied and apparent authority.
The authority a producer
- correct answer has that is written in his or her contract is known as express authority.
A producer's binding authority (if any)
- correct answer is expressed (written down) in the producer's contract with the insurer the producer
represents.
The authority not expressly (written) granted,
- correct answer but is actual authority the producer has to transact normal business activities, is known
as implied authority.
The elements of a legal contract may be remembered
- correct answer by the acronym C-O-A-L (consideration, offer, acceptance, legal purpose and legal
capacity).
A requirement for a valid contract
- correct answer is offer and acceptance, or mutual agreement.
