MICHIGAN CREDIT INSURANCE STUDY GUIDE EXAM | QUESTIONS & ANSWERS (VERIFIED) | LATEST UPDATE | GRADED A+

Definintion of Insurance Correct Answer: "A social device for transferring risk through an accumulation of funds" Policy Correct Answer: A contract with the insurance company (insurer) that states what the policyowner (insured) must pay for and what they agree to cover if damage or loss occurs. Premium Correct Answer: A set amount that must be paid for a Policy. Concept of Risk Correct Answer: Risk evolves from uncertainty - the unpredictable chance occurrences of everyday life, which result in financial or economic loss. 2 Life insurance addresses the financial impact of ____________. Correct Answer: Premature Death Speculative Risk Correct Answer: Involves the chance of winning or losing. It is a win-lose situation. Pure Risk Correct Answer: Creates only financial loss. It's a lose-lose situation. Insurance only deals with _______ risk. Correct Answer: Pure