Florida Insurance 2-14 Exam Terms (A+ Graded already)

Insurance correct answers 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 correct answers Is based on actuarial or mathematical principles and guarantees a specified sum of money upon the death of the person who is insured. Annuities correct answers 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 correct answers Uncertainty regarding loss; the probability of loss occurring for an insured or prospect Speculative Risks correct answers Involve the possibility of loss and gain. (Not Insurable) Pure Risks correct answers Involve the possibility of loss only. (Insurable) Peril correct answers Cause of risk (when a building burns, fire is the peril) Hazards correct answers The source of danger Physical Hazard correct answers A hazard being of physical nature. A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness) Risk Avoidance correct answers Occurs when individuals evade risk entirely. "If you don't drive, then you avoid getting in an auto accident." Risk Reduction correct answers Takes place when the chances of loss are lessened. Changing a lifestyle to minimize a known risk. Risk Retention correct answers Being aware of the risks involved and taking precautions for financial protection. Auto policy's deductible is an illustration of risk retention Risk Transference correct answers The act of shifting the responsibility of risk to another in the form of an insurance contract. Adverse Selection correct answers 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. Insuring Pure Risk correct answers Loss must be due to chance Loss must be definite and measurable Risk must be predictable Loss must NOT be catastrophic