Life and Health Insurance License Exam - MN Questions And Answers Already Passed!!

Insurance is a... - transfer of risk What type of risk is gambling? - Speculative Risk What type of risk is a car accident? - Pure Risk What type of risk is insurable? - Pure Risk uncertainty about whether a loss will occur - Risk Risk Management Method Acronym - STARR (sharing, transfer, avoidance, retention, reduction) Insurance company purchases insurance to cover their own exposure to loss - reinsurance Loss Equation - value before loss - value after loss = total amount of loss Reduction in the value of an asset - loss cause of a loss - Peril increases chance loss will occur - Hazard 3 Types of hazards - Physical, Moral, MoraleMoral Hazard - Dishonesty Physical Hazard - physically identifiable Morale Hazard - carelessness (STARR) two or more individuals pay a portion of any loss incurred - Sharing (STARR) insurance - Transfer (STARR) eliminating a particular risk by not engaging in a certain activity - Avoidance (STARR) lessening the chance a loss will occur - Reduction (STARR) individual will pay for the loss if it occurs - Retention Acronym for risks that can be insured - CANHAM (calculable, affordable, non-catastrophic, homogeneous, accidental, measurable) Tendency for higher risk individuals to get and keep insurance more than individuals who represent a average level of risk - Adverse Selection Who is a stock insurer owned by? - stockholders Who oversees operations in a stock insurance company? - Board of Directors Do stock insurers give out dividends? Is so, are they taxable? - Yes, Yes Stock insurers- assessable or non-assesable? - Non AssessableWhat types of policies do stock insurers issue? - Non-par