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Stack #218239
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. |