Texas Life, Accident, and Health Insurance Questions with 100% Correct Answers

Risk Correct Answer chance of loss Speculative risk Correct Answer -involves the chance of gain or loss and is NOT insurable -ex: gambling Pure risk Correct Answer involves only the chance of loss and is insurable Exposure Correct Answer being subject to the possibility of loss because of an activity, location, or characteristics -second hand smoke -no control on exposure Peril Correct Answer cause of loss Natural peril Correct Answer lightning, hail, hurricane, and so forth Human peril Correct Answer theft, murder, auto accidents, industrial accidents, and illness Loss Correct Answer accidental/unexpected death or injury to a person or any reduction in quality, quantity, or value of property Hazard Correct Answer situation that introduces or increases the probability of loss -triggers the event -overloaded light switch Elements of an insurable risk Correct Answer (CANHAM) -Calculable -Affordable (premiums have to be affordable) -Noncatastrophic (not war, nuclear) -Homogenous (similar in nature; how many 31-yr-old males die each yr) -Accidental and definite (not on purpose) -Measurable (have to be able to put a $ amount on it)