Primerica Focused exam (basic
principles) questions and answers 2023
which of the following insurance would be considered risk-sharing a arrangement? -
correct answer reciprocal.
Units with the same or similar exposure to loss are referred to as - correct answer
homogeneous
The growing tendency of individuals to file lawsuit and to claim tremendous amounts for
alleged damages is known as - correct answer legal hazard
Which law is the foundation of the statistical prediction of loss upon which rates for
insurance are calculated? - correct answer law of large numbers.
a set of legal or regulatory conditions that affect an insurers ability to collect premiums
commensurate with the level of risks incurred would be considered a/an - correct
answer legal hazard
a peril is most easily defined as - correct answer The cause of loss insured against
which of the following is not a goal of risk retention? - correct answer to minimize the
insured's level of liability in the event of loss
the risk of loss may be classified as - correct answer pure risk and speculative risk.
Pure risks involve the probability or possibility of loss with no chance for gain. Pure risks
are generally insurable. Speculative risks involve uncertainty as to whether the final
outcome will be gain or loss. Speculative risks are generally uninsurable.
a person who does not lock the door or does not repair leaks shows an indifferent
attitude. This person presents what type of hazard? - correct answer morale.
A morale hazard is someone who has an indifferent attitude towards an insurance
company. He is careless or irresponsible because he knows his loss will be covered by
insurance.
The protection of an insurer from adverse selection is provided in part by? - correct
answer a profitable distribution from of exposures.
The profitable distribution of exposures, which balances poor risks and preferred risks
with standard risks in the middle, protects insurers from adverse selection.
What do individuals use to transfer their risk of loss to a larger group? - correct answer
insurance
