Florida Insurance 2-15 Exam Terms

Insurance - Answer- Financial protection against loss or harm - An arrangement by which company gives customers financial protection against loss or harm such as theft or illness in return for premium payments. Life Insurance - Answer- Is based on actuarial or mathematical principles and guarantees a specified sum of money upon the death of the person who is insured. Health Insurance - Answer- Evolved from scientific principles to provide funds for medical expensed due to sickness or injury and to cover loss of income during disability Annuities - Answer- Provide a stream of income by making a series of payments to the annuitant for the annuitant's lifetime or for a specifically designated period of time. Risk - Answer- Uncertainty regarding loss; the probability of loss occurring for an insured or prospect Speculative Risks - Answer- Involve the possibility of loss and gain. (Not Insurable) Pure Risks - Answer- Involve the possibility of loss only. (Insurable) Peril - Answer- Cause of risk (when a building burns, fire is the peril) Hazards - Answer- The source of danger Physical Hazard - Answer- A hazard being of physical nature. A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness) Risk Avoidance - Answer- Occurs when individuals evade risk entirely. "If you don't drive, then you avoid getting in an auto accident." Risk Reduction - Answer- Takes place when the chances of loss are lessened. Changing a lifestyle to minimize a known risk. Risk Retention - Answer- Being aware of the risks involved and taking precautions for financial protection. Auto policy's deductible is an illustration of risk retention Risk Transference - Answer- The act of shifting the responsibility of risk to another in the form of an insurance contract. Adverse Selection - Answer- Refers to the tendency for those individuals who present less favorable insurance risk to seek or continue insurance to a great extent than other risks.