OHIO LIFE INSURANCE EXAM 4 MOCK TEST
AND STUDY MATERIAL WITH STATE
REGULATIONS AND APPLICATION SCENARIOS
◉ Indemnify.
Answer: To make one whole by restoring them to the same financial
position that existed before the loss
◉ Pure risk.
Answer: There is only a chance of loss and there is no possibility for
gain (insurable)
◉ Speculative risk.
Answer: Uncertainty of loss or gain: these risks are undertaken
voluntarily (ex: stock market)
◉ Peril.
Answer: The immediate specific event causing loss
◉ Moral hazard.
Answer: Arise from peoples habits and values (ex: filing a false
claim)
,◉ Morale hazard.
Answer: Arise from human carelessness (ex: failing to take safety
precautions)
◉ STARR.
Answer: Methods for dealing with risk: Sharing, Transfer, Avoidance,
Reduction, Retention
◉ Insurable interest.
Answer: An individual must have a legitimate interest in the
preservation of the life of the property insured
◉ Subrogation.
Answer: A clause in the insurance policy that gives the insurer the
right to sue the party responsible for the loss (not used in life
insurance)
◉ Face amount.
Answer: Maximum amount of liability of the insurer
◉ Elimination period.
,Answer: The "deductible" for disability insurance; the number of
days a person must be disabled before benefits become payable
◉ Coinsurance.
Answer: The insurer and insured share allowable expenses
◉ Life insurance.
Answer: Insurance coverage on human lives including endowments
and annuities. May also include benefits for accidental death,
dismemberment, or diability
◉ Variable products.
Answer: These carry investment risk- the insured may lose money
because of a decrease in the price of securities underlying the
product. The SEC and state insurance departments regulate variable
contracts
◉ Credit.
Answer: A limited line of insurance protecting the insured against
financial consequences should a debtor be unable to pay due to
illness/ death
◉ Stock insurance company.
, Answer: Non- participating company because its policyholders do
not participate in dividends
◉ Mutual insurers.
Answer: Participating company because ownership rests with the
policyholders who are paid policy dividends of funds not paid out in
claims and operating costs
◉ Reciprocal insurers.
Answer: Unincorporated groups of people that provide insurance for
one another through indemnity agreements. Each individual is
known as a subscriber and accounts are overseen by an attorney-in-
fact
◉ Fraternal benefit societies.
Answer: Life insurance carriers that exist as social organizations.
They have open contracts, which allow for additional, unscheduled
premium charges in times of financial difficulty
◉ Lloyds of London.
Answer: A meeting place for members who transact insurance and
are individually liable for contracts they enter
◉ Reinsurers.
AND STUDY MATERIAL WITH STATE
REGULATIONS AND APPLICATION SCENARIOS
◉ Indemnify.
Answer: To make one whole by restoring them to the same financial
position that existed before the loss
◉ Pure risk.
Answer: There is only a chance of loss and there is no possibility for
gain (insurable)
◉ Speculative risk.
Answer: Uncertainty of loss or gain: these risks are undertaken
voluntarily (ex: stock market)
◉ Peril.
Answer: The immediate specific event causing loss
◉ Moral hazard.
Answer: Arise from peoples habits and values (ex: filing a false
claim)
,◉ Morale hazard.
Answer: Arise from human carelessness (ex: failing to take safety
precautions)
◉ STARR.
Answer: Methods for dealing with risk: Sharing, Transfer, Avoidance,
Reduction, Retention
◉ Insurable interest.
Answer: An individual must have a legitimate interest in the
preservation of the life of the property insured
◉ Subrogation.
Answer: A clause in the insurance policy that gives the insurer the
right to sue the party responsible for the loss (not used in life
insurance)
◉ Face amount.
Answer: Maximum amount of liability of the insurer
◉ Elimination period.
,Answer: The "deductible" for disability insurance; the number of
days a person must be disabled before benefits become payable
◉ Coinsurance.
Answer: The insurer and insured share allowable expenses
◉ Life insurance.
Answer: Insurance coverage on human lives including endowments
and annuities. May also include benefits for accidental death,
dismemberment, or diability
◉ Variable products.
Answer: These carry investment risk- the insured may lose money
because of a decrease in the price of securities underlying the
product. The SEC and state insurance departments regulate variable
contracts
◉ Credit.
Answer: A limited line of insurance protecting the insured against
financial consequences should a debtor be unable to pay due to
illness/ death
◉ Stock insurance company.
, Answer: Non- participating company because its policyholders do
not participate in dividends
◉ Mutual insurers.
Answer: Participating company because ownership rests with the
policyholders who are paid policy dividends of funds not paid out in
claims and operating costs
◉ Reciprocal insurers.
Answer: Unincorporated groups of people that provide insurance for
one another through indemnity agreements. Each individual is
known as a subscriber and accounts are overseen by an attorney-in-
fact
◉ Fraternal benefit societies.
Answer: Life insurance carriers that exist as social organizations.
They have open contracts, which allow for additional, unscheduled
premium charges in times of financial difficulty
◉ Lloyds of London.
Answer: A meeting place for members who transact insurance and
are individually liable for contracts they enter
◉ Reinsurers.
