Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam with our comprehensive quiz featuring multiple-choice questions and detailed explanations. Gain the knowledge and confidence you need to succeed on your test!

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Which of the following best describes an insurance premium?

Contract terms
Cost of coverage
Policy exclusions
Underwriting criteria

The correct answer is: Contract terms

An insurance premium is best described as the cost of the coverage. This is the amount of money an individual or business pays for an insurance policy to be covered against specified risks. Premiums can vary based on factors such as the type of coverage, the insured's age, health status, occupation, and other risk factors. Premiums are paid periodically (usually monthly, quarterly, or annually) to keep the insurance policy in force. The other options are not correct: - Contract terms (Option A) refers to the specific conditions and provisions outlined in the insurance policy. - Policy exclusions (Option C) are the situations, conditions, or circumstances not covered by the insurance policy. - Underwriting criteria (Option D) are the factors insurance companies consider when determining whether to provide insurance coverage and at what price.