Nebraska Life and Health Insurance
Exam 2024/2025
What is Insurance? - Precise Answer ✔✔a contract in which 1 party
(insurance company) agrees to indemnify (make whole) the insured
party against loss, damage, or a liability arising from an unknown event.
What is life insurance? - Precise Answer ✔✔a policy that protects
survivors from losses suffered after an insured's death
What does insurance do? - Precise Answer ✔✔transfers the risk of loss
from an individual or business entity to an insurance company which
spreads out costs of unexpected losses to many individuals
What is risk? - Precise Answer ✔✔uncertainty or chance of a loss
occurring
Pure risk - Precise Answer ✔✔refers to sutuations that can only result in
a loss or no change, no opportunity for financial gain
What type of risk do insurance companies accept? - Precise Answer
✔✔pure risk
, Speculative risk - Precise Answer ✔✔involves opportunity for loss or
gain
Hazard - Precise Answer ✔✔conditions or situation that increase
probability of an insured loss occurring
Physical hazard - Precise Answer ✔✔individual characteristics that
increase the chances of the cause of loss
Example of a physical hazard - Precise Answer ✔✔past medical history,
existing conditions, (blindness)
Moral hazard - Precise Answer ✔✔tendencise towards increased risk.
moral hazards inclove evaluating character of insured
example of moral hazard - Precise Answer ✔✔applicants who may lie
on an application for insurance or in the past have submitted fraudulent
claims against an insurer
Morale hazard - Precise Answer ✔✔similar to moral hazards, except
that they arise from a state of mind that causes indifference to loss, such
as carelessness
example of morale hazard - Precise Answer ✔✔actions taken without
forethought may cause physical injuries
Exam 2024/2025
What is Insurance? - Precise Answer ✔✔a contract in which 1 party
(insurance company) agrees to indemnify (make whole) the insured
party against loss, damage, or a liability arising from an unknown event.
What is life insurance? - Precise Answer ✔✔a policy that protects
survivors from losses suffered after an insured's death
What does insurance do? - Precise Answer ✔✔transfers the risk of loss
from an individual or business entity to an insurance company which
spreads out costs of unexpected losses to many individuals
What is risk? - Precise Answer ✔✔uncertainty or chance of a loss
occurring
Pure risk - Precise Answer ✔✔refers to sutuations that can only result in
a loss or no change, no opportunity for financial gain
What type of risk do insurance companies accept? - Precise Answer
✔✔pure risk
, Speculative risk - Precise Answer ✔✔involves opportunity for loss or
gain
Hazard - Precise Answer ✔✔conditions or situation that increase
probability of an insured loss occurring
Physical hazard - Precise Answer ✔✔individual characteristics that
increase the chances of the cause of loss
Example of a physical hazard - Precise Answer ✔✔past medical history,
existing conditions, (blindness)
Moral hazard - Precise Answer ✔✔tendencise towards increased risk.
moral hazards inclove evaluating character of insured
example of moral hazard - Precise Answer ✔✔applicants who may lie
on an application for insurance or in the past have submitted fraudulent
claims against an insurer
Morale hazard - Precise Answer ✔✔similar to moral hazards, except
that they arise from a state of mind that causes indifference to loss, such
as carelessness
example of morale hazard - Precise Answer ✔✔actions taken without
forethought may cause physical injuries
