ALAHI - Arizona Life Accident and Health Insurance Exam

Question 1: An insurance instructor explains that every policy is written against certain identified causes of loss, and asks the class to name the term for the actual cause that brings about a loss. Which of the following terms describes the cause of a loss?

Peril

Exposure

Hazard

Risk

Question 2: An underwriter reviewing a home file notes that the roof is worn and the electrical panel is outdated, and observes that these conditions raise the likelihood that a covered loss will occur. Which of the following terms describes conditions of that kind?

Peril

Loss

Indemnity

Hazard

Question 3: An applicant for a health policy has a documented history of filing exaggerated claims with two previous insurers, and the underwriter treats that history as a warning sign. Which of the following terms describes the kind of hazard this applicant presents?

Moral hazard

Physical hazard

Morale hazard

Legal hazard

Question 4: An insured who recently purchased comprehensive coverage begins leaving a vehicle unlocked with valuables in plain view, reasoning that any theft would simply be paid by the insurer. Which of the following terms best describes this insured's changed behavior?

Moral hazard

Speculative risk

Morale hazard

Physical hazard

Question 5: An instructor tells a class that insurers will write coverage on one of two categories of risk but never on the other, and asks which category insurance is designed to address. Which of the following describes the category of risk that insurers will cover?

Financial risk in business ventures

Any risk the applicant will fund

Speculative risk, gain or loss

Pure risk, loss or no loss

Question 6: An insurer is deciding whether a proposed new exposure can be underwritten at all, and reviews whether the potential loss can be measured and whether enough similar units exist to predict results. Which of the following describes what the insurer is testing?

Whether the risk is insurable

Whether the policy is aleatory

Whether the applicant has insurable interest

Whether the loss would be catastrophic

Question 7: An actuary explains that predictions about how many insureds will die or file claims in a year become steadily more reliable as the number of similar insureds grows. Which of the following principles is the actuary describing to the class?

The doctrine of reasonable expectations

The principle of indemnity

The law of large numbers

Adverse selection

Question 8: An insurer notices that applicants with serious undisclosed health problems apply for coverage far more often than healthy applicants do, which threatens to distort the pricing of the whole block. Which of the following terms describes this tendency?

Adverse selection

Concurrent causation

Moral hazard

Coinsurance

Question 9: A small business owner concludes that manufacturing a particular chemical product carries liability exposure the company cannot manage, and decides never to enter that line of business. Which of the following methods of handling risk has this owner chosen?

Retention

Reduction

Transfer

Avoidance

Question 10: A company selects a high deductible on its group health plan and sets aside funds each year to pay the portion of claims falling below that deductible amount. Which of the following methods of handling risk does this arrangement illustrate?

Transfer

Sharing

Retention

Avoidance

Question 11: A homeowner purchases a policy and pays premium so that an insurer will bear the financial consequences of a fire, a theft or a liability judgment. Which of the following methods of handling risk does buying that policy represent?

Reduction

Avoidance

Retention

Transfer

Question 12: Several medical practices in the Phoenix area form an arrangement in which each one contributes to a common fund that is used to pay the malpractice losses of any participating member. Which of the following methods of handling risk does this arrangement best illustrate?

Sharing

Speculation

Avoidance

Reduction

Question 13: An insurance company is owned by shareholders who elect its board of directors and receive taxable dividends when the company performs well, while policyowners have no ownership rights. Which of the following types of insurer is being described here?

Mutual insurer

Stock insurer

Reciprocal insurer

Fraternal benefit society

Question 14: An insurance company has no shareholders, is owned by the people who hold its policies, and returns excess premium to those policyowners as dividends that are generally not treated as taxable income. Which of the following describes this insurer?

Risk retention group

Surplus lines insurer

Mutual insurer

Stock insurer

Question 15: An organization sells life insurance only to people who belong to it, operates through a lodge system, exists for charitable and benevolent purposes, and distributes no profit to owners. Which of the following describes this type of insurer?

Fraternal benefit society

Lloyd's association

Stock insurer

Reciprocal insurer

Question 16: A group of subscribers exchange insurance contracts with one another through a common administrator who is authorized to act on their behalf in accepting and managing the exposures. Which of the following describes the party who administers this arrangement?

A third party administrator

An attorney in fact

A managing general agent

A reinsurance intermediary

Question 17: An insurance company was chartered and organized under the laws of Arizona and maintains its home office in Phoenix, and a candidate is asked how Arizona would classify that company. Which of the following terms describes this insurer in Arizona?

Nonadmitted insurer

Foreign insurer

Domestic insurer

Alien insurer

Question 18: An insurance company organized under the laws of Canada wants to write business in Arizona and asks how Arizona law will classify a company formed outside the United States. Which of the following terms applies to this insurer in Arizona?

Domestic insurer

Fraternal insurer

Foreign insurer

Alien insurer

Question 19: An insurer has received a certificate of authority from the state regulator permitting it to transact insurance business within that state. Which of the following terms describes an insurer that holds such a certificate from the state where it writes business?

Alien insurer

Admitted insurer

Reciprocal insurer

Surplus lines broker

Question 20: An applicant completes an application and submits the initial premium, and the insurer later issues the policy as requested. An instructor asks the class to name what the applicant supplied in this exchange. Which of the following elements does that combination represent?

The acceptance

Legal purpose

The consideration

The offer

ALAHI Arizona Life Accident and Health Insurance Exam - Set 2 - Part 1

Question 1: An insurance instructor explains that every policy is written against certain identified causes of loss, and asks the class to name the term for the actual cause that brings about a loss. Which of the following terms describes the cause of a loss?

Question 2: An underwriter reviewing a home file notes that the roof is worn and the electrical panel is outdated, and observes that these conditions raise the likelihood that a covered loss will occur. Which of the following terms describes conditions of that kind?

Question 3: An applicant for a health policy has a documented history of filing exaggerated claims with two previous insurers, and the underwriter treats that history as a warning sign. Which of the following terms describes the kind of hazard this applicant presents?

Question 4: An insured who recently purchased comprehensive coverage begins leaving a vehicle unlocked with valuables in plain view, reasoning that any theft would simply be paid by the insurer. Which of the following terms best describes this insured's changed behavior?

Question 5: An instructor tells a class that insurers will write coverage on one of two categories of risk but never on the other, and asks which category insurance is designed to address. Which of the following describes the category of risk that insurers will cover?

Question 6: An insurer is deciding whether a proposed new exposure can be underwritten at all, and reviews whether the potential loss can be measured and whether enough similar units exist to predict results. Which of the following describes what the insurer is testing?

Question 7: An actuary explains that predictions about how many insureds will die or file claims in a year become steadily more reliable as the number of similar insureds grows. Which of the following principles is the actuary describing to the class?

Question 8: An insurer notices that applicants with serious undisclosed health problems apply for coverage far more often than healthy applicants do, which threatens to distort the pricing of the whole block. Which of the following terms describes this tendency?

Question 9: A small business owner concludes that manufacturing a particular chemical product carries liability exposure the company cannot manage, and decides never to enter that line of business. Which of the following methods of handling risk has this owner chosen?

Question 10: A company selects a high deductible on its group health plan and sets aside funds each year to pay the portion of claims falling below that deductible amount. Which of the following methods of handling risk does this arrangement illustrate?

Question 11: A homeowner purchases a policy and pays premium so that an insurer will bear the financial consequences of a fire, a theft or a liability judgment. Which of the following methods of handling risk does buying that policy represent?

Question 12: Several medical practices in the Phoenix area form an arrangement in which each one contributes to a common fund that is used to pay the malpractice losses of any participating member. Which of the following methods of handling risk does this arrangement best illustrate?

Question 13: An insurance company is owned by shareholders who elect its board of directors and receive taxable dividends when the company performs well, while policyowners have no ownership rights. Which of the following types of insurer is being described here?

Question 14: An insurance company has no shareholders, is owned by the people who hold its policies, and returns excess premium to those policyowners as dividends that are generally not treated as taxable income. Which of the following describes this insurer?

Question 15: An organization sells life insurance only to people who belong to it, operates through a lodge system, exists for charitable and benevolent purposes, and distributes no profit to owners. Which of the following describes this type of insurer?

Question 16: A group of subscribers exchange insurance contracts with one another through a common administrator who is authorized to act on their behalf in accepting and managing the exposures. Which of the following describes the party who administers this arrangement?

Question 17: An insurance company was chartered and organized under the laws of Arizona and maintains its home office in Phoenix, and a candidate is asked how Arizona would classify that company. Which of the following terms describes this insurer in Arizona?

Question 18: An insurance company organized under the laws of Canada wants to write business in Arizona and asks how Arizona law will classify a company formed outside the United States. Which of the following terms applies to this insurer in Arizona?

Question 19: An insurer has received a certificate of authority from the state regulator permitting it to transact insurance business within that state. Which of the following terms describes an insurer that holds such a certificate from the state where it writes business?

Question 20: An applicant completes an application and submits the initial premium, and the insurer later issues the policy as requested. An instructor asks the class to name what the applicant supplied in this exchange. Which of the following elements does that combination represent?

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