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General Insurance
| Question | Answer |
|---|---|
| 2 types of Risk | Pure Risk & Speculative Risk |
| Situations that can only result in a loss or no change. No opportunity for financial gain. | Pure Risk |
| Opportunity for either loss or gain. | Speculative Risk |
| Type of Risk that is not insurable | Speculative risk |
| Type of Risk insurance companies are willing to accept | Pure risk |
| Unit of measure used to determine rates charges for insurance coverage | Exposure |
| What are the factors considered in determining life insurance? | Age, sex, medical history, occupation |
| A large number of units having the same or similar exposure to loss | Homogeneous |
| Conditions or situations that increase probability of an insured loss occurring | Hazard |
| Individual characteristics that increase the chances of a loss | Physical hazard |
| Tendencies towards increased risk | Moral hazard |
| Similar to moral hazards, except they arise from a state of mind that causes indifference to loss | |
| Causes of loss insured against in an insurance policy | Peril |
| Financial loss caused by premature death | Life insurance |
| Medical expenses and/or loss of income caused by injury or sickness | Health Insurance |
| Loss and/or damage of property and resulting liabilities | Casualty Insurance |
| Reduction, decrease or disappearance of value | Loss |
| Transfer of loss/Protection | Insurance |
| Eliminating exposure to a loss | Avoidance |
| Planned assumption of Risk through deductibles, co-payments, or self-insurance | Risk retention |
| To reduce expenses and improve cash flow, to increase control of claim reserving and Claims Settlement; and to fund for losses that cannot be insured | Purpose of retention |
| Method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within the group | Sharing |
| Actions such as installing smoke detectors in homes, having annual physicals to detect health problems early or perhaps making a change in our lifestyles | Reduction |
| The larger the number of people with a similar exposure to loss, the more predictable actual losses will be | The law of large numbers |
| This law forms the basis for statistical prediction of loss upon which insurance rates are calculated | Law of large numbers |
| A loss that is outside the insured's control | Due to chance |
| A loss that is specific as to the cause, time, place and amount. An insurer must be able to determine how much the benefit will be and when it becomes payable | Definitely and measurable |
| Insurers must be able to estimate the average frequency and severity of future losses and set appropriate premium rates (in life and health insurance, the use of morality tables and morbidity tables allows the insurer to project losses based on statistics | Statistically predictable |
| Insurance needs to be reasonably certain their losses will not exceed specific limits. That is why insurance policies usually exclude coverage for loss caused by war or nucular events: There is no statistical data that allows for the development of rates | Not catastrophic |
| There must be a sufficiently large pool of the insured that represents a random selection of risks in terms of age, gender, occupation, health and economic status, and geographical location | |
| Randomly selected and large loss exposure | |
| Loss of physical property or loss of income producing abilities | Property Insurance |
| The basis of insurance is sharing risk amount a large group of people with a similar exposure to loss | Homogeneous |
| The insuring of risks that are no reviews prone to losses than the average risk | Adverse selection |
| Which if the following are the authorities that an agent can hold? Apparently and allowed, authorized and admitted, primary and secondary, Express and implied | Express and implied |
| What must an insurer of obtain in order to transact insurance with a given state? | |
| What term best describes the act of withholding material information that would be crucial to an underwriting decision? | Concealment |
| What is the term for the entity that an agent represents regarding contractual agreements with third parties? | Principal |
| If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? | Unilateral |
| When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as _____? | Consideration |
Created by:
cruttner
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