CA Life and Health Exam Correct 100%

What is insurance? -ANSWER Insurance is the legal contract where two parties agree that if something will happen, a value will be exchanged. What's the difference between pure risk and speculative risk? -ANSWER Pure risk is when you'll lose it all or there will be no change. Speculative risk you can either win or lose. What is peril? -ANSWER peril is the causes of loss insured against in an insurance policy What is hazard? -ANSWER conditions that increase the probability of something bad happening What's the diff between moral, morale, and physical hazard? -ANSWER physical is the hazard that results from physical body issues. Moral hazard is the evaluation of character (lying) morale hazard is an indifference which causes risk. What is the law of large numbers? -ANSWER the larger the number of people more exposed to risk, the more predictable the risk outcome. What is an insurable event? -ANSWER the more predictable an event, the more insurable it becomes What's the diff between contract and tort law -ANSWER tort is non-contract and private Four major elements of a contract -ANSWER agreement, consideration, competent parties, legal purpose contract of adhesion -ANSWER prepared by insurer then accepted or rejected Conditional contract -ANSWER conditions need to be met in order for contract to be executed aleatory contract -ANSWER exchange of unequal amounts of value unilateral contract -ANSWER only one party is forced to do something personal contract -ANSWER can't be transferred w/out notifying insurer When can you rescind a contract -ANSWER intentional or unintentional concealment, violation of material warranty, false material representation six specifications for insurance policies -ANSWER parties contracted person insured statement of insurable interest risks insured against time period stated premium 4 categories of info necessary for financial planning -ANSWER debt income mortgage expenses key person insurance -ANSWER losing someone key to a business buy-sell insurance (business continuation) -ANSWER what will be done with a business if the owner dies Premiums -ANSWER life insurance payment installments term life insurance -ANSWER covered only for