Life & Health Insurance Practice Exam 2025 - Free Practice Questions and Study Guide

The primary attribute of a private (commercial) insurer is that it operates for profit. This means that these insurers are established as business entities with the aim of generating income for their owners or shareholders. They provide a variety of insurance products, including life, health, property, and casualty coverage, and they seek to balance the premiums they collect from policyholders against the claims they are required to pay out, along with administrative expenses and investment costs.

In contrast, a government-owned insurer would not fit this definition since its primary purpose would be to provide coverage on a broader public policy basis rather than profit. Additionally, options that suggest a focus on substandard risks or liability coverage specifically do not capture the broad operational purpose of private insurers, which engage a wide array of risks and lines of coverage beyond just liability. The emphasis on profitability is what distinctly defines commercial insurers in the insurance market.