Idaho Life Insurance Exam Questions and Answers 100% CORRECT!!

Two kinds of risk - ANSWER-Pure risk (situation that can only result in a loss or stay the same) & Speculative risk (gambiling) **Pure risk is the only type that insurance companies will accept What is the definition of hazard? What are the three kinds? - ANSWER--Conditions or situations that increase the probability of an insured loss occurring. -Physical, moral, morale Physical hazard - ANSWER-Individual characteristics that increase the chances of the cause of loss (they exist because of a physical conditions, past medical history, or a condition at birth). Moral hazards - ANSWER-Tendencies towards increased risk. They involve evaluating the character and reputation of the proposed insured (they refer to those applicants who may lie on an insurance application or have previously submitted fraudulent claims against an insurer. Morale hazards - ANSWER-Similar to moral hazards, but arise from a state of mind that causes indifference to loss, such as carelessness. Actions taken without forethought may cause physical injuries. What is a peril? - ANSWER-**Perils are the CAUSES of loss insured against in an insurance policy -Life insurance insures against the financial loss caused by the premature death of the insured -Health insurance insures against the medical expenses and/or loss of income caused by the insured's sickness or accidental injury -Property insurance insures against the loss of physical property or the loss of its income-producing abilities -Casualty insurance insures against the loss and/or damage of property and resulting liabilities.