The transfer of financial responsibility associated with a potential of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.

Conditions or situations that increase the probability of an insured loss occurring.

Individual characteristics that increas the chances of the cause of loss. Physical condition, past medical history, condition at birth.

Tendecies towards increased risk. Evaluating the character and reputation of proposed insured.

Indifference to loss, such as carelessness.

Uncertainity or chance of a loss occurring.

Situations that can only result in loss or no change.

Opportunity for either loss or gain.

Units of measure used to determine rates charged for insurance coverage.

Causes of loss insured against in an insurance policy.

Reduction, decrease, or disappearance of value of the person or property isured in a policy.

Insuring risks that are of a poorer class (more prone to losses) than the average risk.

Principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss.

Method used by insurers to protect against catastrophic losses.

Unequal amounts or values are exchanged.

Contract between the insurance company and an individual.

Contract were only one of the parties to the contract is legally bound to do anything.

Certain conditions must be met by the owner and the company in order for the contract to be executed.

Implies that there will be no fraud, misrepresentation or concealment between the parties.

Provision in an insurance policy that states that in the event of loss, an insured is permitted to collect only to the extent of his/her financial loss and is not allowed to gain financially because of the existence of an insurance contract.

Legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after that right or privilege has been waived.

Person who acts for another person or entity, known as the principal.

Legal term for the intentional withholding of information.

Intentional misrepresentation or intentional concealment of material.

Intentional act of relinquishing a known right, claim or privilege.

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Health and Life Insurance Exam

Question	Answer
Define Insurance	The transfer of financial responsibility associated with a potential of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.
Hazards	Conditions or situations that increase the probability of an insured loss occurring.
Physical Hazards	Individual characteristics that increas the chances of the cause of loss. Physical condition, past medical history, condition at birth.
Moral Hazards	Tendecies towards increased risk. Evaluating the character and reputation of proposed insured.
Morale Hazards	Indifference to loss, such as carelessness.
Risk	Uncertainity or chance of a loss occurring.
Pure Risk	Situations that can only result in loss or no change.
Speculative Risk	Opportunity for either loss or gain.
Exposure	Units of measure used to determine rates charged for insurance coverage.
Peril	Causes of loss insured against in an insurance policy.
Loss	Reduction, decrease, or disappearance of value of the person or property isured in a policy.
Adverse Selection	Insuring risks that are of a poorer class (more prone to losses) than the average risk.
Law of Large Numbers	Principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss.
Reinsurance	Method used by insurers to protect against catastrophic losses.
Aleatory Contract	Unequal amounts or values are exchanged.
Personal Contract	Contract between the insurance company and an individual.
Unilateral Contract	Contract were only one of the parties to the contract is legally bound to do anything.
Conditional Contract	Certain conditions must be met by the owner and the company in order for the contract to be executed.
Utmost Good Faith	Implies that there will be no fraud, misrepresentation or concealment between the parties.
Indemnity	Provision in an insurance policy that states that in the event of loss, an insured is permitted to collect only to the extent of his/her financial loss and is not allowed to gain financially because of the existence of an insurance contract.
Estoppel	Legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after that right or privilege has been waived.
Agent/Producer	Person who acts for another person or entity, known as the principal.
Concealment	Legal term for the intentional withholding of information.
Fraud	Intentional misrepresentation or intentional concealment of material.
Waiver	Intentional act of relinquishing a known right, claim or privilege.

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