semplr.

Exams · Certifications · Licensing

Life and Health Insurance Producer Exam

Insurance contracts: practice questions

Our Life & Health Insurance bank has 13 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

Start the free mock exam

Question 1

Who is responsible for the actions of an agent acting within the scope of their authority?

  1. The state insurance regulator
  2. The beneficiary
  3. The insurer (principal)
  4. The applicant
Show the answer

C. The insurer (principal) — Agents represent the insurer.

Question 2

Why is an insurance policy called an aleatory contract?

  1. Both parties exchange exactly equal values at all times during the contract
  2. Only one party makes any legally enforceable promise
  3. The values exchanged may be unequal, depending on chance
  4. It must be renewed by both parties each and every year
Show the answer

C. The values exchanged may be unequal, depending on chance — A small premium may buy a large benefit.

Question 3

What is the difference between express and implied authority of an agent?

  1. Express authority is granted by the state; implied authority is granted by the insured person
  2. Express authority allows changing policy terms; implied authority does not
  3. Express authority applies only to life insurance; implied authority applies to health
  4. Express authority is written in the agent's contract; implied authority is what the public reasonably assumes
Show the answer

D. Express authority is written in the agent's contract; implied authority is what the public reasonably assumes — Apparent authority is created by the insurer's actions.

Question 4

Why is an insurance policy called a contract of adhesion?

  1. Both parties negotiate every term in detail before the contract is signed by them
  2. It requires a court's approval before taking effect
  3. The insurer writes it and the insured must accept it as written
  4. It sticks to the insured even after the policy lapses
Show the answer

C. The insurer writes it and the insured must accept it as written — Ambiguities are interpreted in favour of the insured.

Question 5

What is a material fact?

  1. Any fact written in the application, however minor or unrelated it is to the risk being insured
  2. A detail about the policyowner's favourite hobbies only
  3. Information that would affect the insurer's decision to issue or price a policy
  4. Information about the agent's commission on the policy
Show the answer

C. Information that would affect the insurer's decision to issue or price a policy — For example, a serious medical condition.

More Life & Health Insurance topics