Arizona Health Insurance Exam with accurate detailed answers
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Insurance - ✔✔a contract in which one party (the insurance company) agrees to "make whole"
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the insured party against loss, damage or liability arising from an unlikely event
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In ___________ insurance, the policy protects survivors from losses suffered after the insured's
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death - ✔✔Life || ||
Insurance __________ the risk of loss from an individual or business to an insurance company -
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✔✔Transfers
Risk - ✔✔the uncertainty or chance of a loss occurring
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Pure Risk - ✔✔situations that can only result in a loss or no change
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In __________ risk, there is no opportunity for financial gain - ✔✔Pure
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__________ risk is the only type of risk that insurance companies are willing to accept - ✔✔Pure
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Speculative Risk - ✔✔involves the opportunity for loss or gain|| || || || || || || || ||
__________ risk is not insurable - ✔✔Speculative || || || || || ||
Exposure - ✔✔unit of measurement used to determine rates charged for insurance coverage
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4 Determining Factors in Life Insurance - ✔✔- Age of insured
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- Medical history
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- Occupation
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,- Sex of insured
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Homogeneous - ✔✔a large number of units having the same or similar exposure to loss || || || || || || || || || || || || || ||
What is the basis of insurance? - ✔✔Sharing the risk among members of a large homogeneous
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group with similar exposure to loss
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Hazards - ✔✔conditions or situations that increase the probability of an insured loss occurring
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Physical Hazards - ✔✔individual characteristics that increase the chances of the cause of loss
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__________ hazards exist because of physical condition, past medical history, or a condition at
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birth. - ✔✔Physical
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Moral Hazards - ✔✔tendencies towards increased risk
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__________ hazards involve evaluationg the character and reputation of the proposed insured. -
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✔✔Moral
__________ refer to those applicants who may life on an application for insurance, or in the past,
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have submitted fraudulent claims against an insurer. - ✔✔Moral
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Morale Hazards - ✔✔arise from a state of mind that causes indifference to loss, such as
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carelessness and result from actions taken without forethought. || || || || || || ||
Peril - ✔✔the causes of loss insured against an insurance policy.
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__________ insures against the financial loss caused by premature death of the insured. - ✔✔Life
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,__________ insures against the medical expenses and/or loss of income caused by the insured's
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sickness or accidental injury. - ✔✔Health
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__________ insurance insures against the loss of physical property of the loss of income
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producing abilities. - ✔✔Property || || ||
__________ insurance insures against the loss and/or damage of property resulting in liabilities. -
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✔✔Casualty
Loss - ✔✔the reduction, decrease, or disappearance of value of the person or property insured in
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a policy, caused by a named peril.
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Risk Avoidance - ✔✔eliminating exposure to a loss
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Risk avoidance is __________ but seldom __________. - ✔✔Effective/Practical
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Risk Retention - ✔✔the planned assumption of risk by an insured throughthe use of deductibles,
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co-payments or self-insurance. || ||
Risk retention is also known as __________ when the insured accepts the responsibility for the
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loss before the insurance company pays. - ✔✔Self-insurance
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The purpose of retention is: - ✔✔1. to reduce expenses and improve cash flow
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2. to increase control of claim reserving and claims settlements
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3. to fund for losses that cannot be insured
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Risk Sharing - ✔✔a method of dealing with risk for a group of individual persons or businesses
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with the same or similar exposure to loss to share the losses that occur within that group.
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, A __________ is a formal risk-sharing agreement. - ✔✔Reciprocal insurance exchange
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Risk Reduction - ✔✔actions taken to attempt to lessen the possibility or severity of a loss (ex:
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installing smoke detectors, annual physicals, making lifestyle changes)
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The most effective way to handle risk is to __________ it so that the loss is borne by another
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party. - ✔✔Transfer || ||
Insurance is the most common method of __________ risk from an individual or group to an
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insurance company. Though the purchasing of insuranc will not eliminate the risk of death or
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illness, it relieves the insured of the financial losses these risks bring. - ✔✔Transferring
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Elements of Insurable Risks - ✔✔- Due to chance || || || || || || || ||
- Definite and measurable
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- Statistically predictable
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- Not catastrophic
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- Randomly selected and large loss exposure
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Insurable Risks Due to Chance - ✔✔a loss that is outside of the insured's control
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Insurable Risks that are Definite and Measurable - ✔✔a loss that is specific as to the cause, time,
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place and amount. An insurer must be able to determine how much the benefit will be when it
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becomes payable. ||
Insurable Risks that are Statistically Predictable - ✔✔insurers must be able to estimate the
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average frequency and severity of future losses and set appropriate premium rates
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Insurable Risks that are Not Catastrophic - ✔✔insurers need to be reasonably certain their losses
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will not exceed specific limits because there is no statistical data that allows for the development
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of rates that would be necessary to cover losses from these events.
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Insurance - ✔✔a contract in which one party (the insurance company) agrees to "make whole"
|| || || || || || || || || || || || || || ||
the insured party against loss, damage or liability arising from an unlikely event
|| || || || || || || || || || || ||
In ___________ insurance, the policy protects survivors from losses suffered after the insured's
|| || || || || || || || || || || || ||
death - ✔✔Life || ||
Insurance __________ the risk of loss from an individual or business to an insurance company -
|| || || || || || || || || || || || || || || ||
✔✔Transfers
Risk - ✔✔the uncertainty or chance of a loss occurring
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Pure Risk - ✔✔situations that can only result in a loss or no change
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In __________ risk, there is no opportunity for financial gain - ✔✔Pure
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__________ risk is the only type of risk that insurance companies are willing to accept - ✔✔Pure
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Speculative Risk - ✔✔involves the opportunity for loss or gain|| || || || || || || || ||
__________ risk is not insurable - ✔✔Speculative || || || || || ||
Exposure - ✔✔unit of measurement used to determine rates charged for insurance coverage
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4 Determining Factors in Life Insurance - ✔✔- Age of insured
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- Medical history
|| ||
- Occupation
||
,- Sex of insured
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Homogeneous - ✔✔a large number of units having the same or similar exposure to loss || || || || || || || || || || || || || ||
What is the basis of insurance? - ✔✔Sharing the risk among members of a large homogeneous
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group with similar exposure to loss
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Hazards - ✔✔conditions or situations that increase the probability of an insured loss occurring
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Physical Hazards - ✔✔individual characteristics that increase the chances of the cause of loss
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__________ hazards exist because of physical condition, past medical history, or a condition at
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birth. - ✔✔Physical
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Moral Hazards - ✔✔tendencies towards increased risk
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__________ hazards involve evaluationg the character and reputation of the proposed insured. -
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✔✔Moral
__________ refer to those applicants who may life on an application for insurance, or in the past,
|| || || || || || || || || || || || || || || || ||
have submitted fraudulent claims against an insurer. - ✔✔Moral
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Morale Hazards - ✔✔arise from a state of mind that causes indifference to loss, such as
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carelessness and result from actions taken without forethought. || || || || || || ||
Peril - ✔✔the causes of loss insured against an insurance policy.
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__________ insures against the financial loss caused by premature death of the insured. - ✔✔Life
|| || || || || || || || || || || || || ||
,__________ insures against the medical expenses and/or loss of income caused by the insured's
|| || || || || || || || || || || || || ||
sickness or accidental injury. - ✔✔Health
|| || || || ||
__________ insurance insures against the loss of physical property of the loss of income
|| || || || || || || || || || || || || ||
producing abilities. - ✔✔Property || || ||
__________ insurance insures against the loss and/or damage of property resulting in liabilities. -
|| || || || || || || || || || || || || ||
✔✔Casualty
Loss - ✔✔the reduction, decrease, or disappearance of value of the person or property insured in
|| || || || || || || || || || || || || || || ||
a policy, caused by a named peril.
|| || || || || ||
Risk Avoidance - ✔✔eliminating exposure to a loss
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Risk avoidance is __________ but seldom __________. - ✔✔Effective/Practical
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Risk Retention - ✔✔the planned assumption of risk by an insured throughthe use of deductibles,
|| || || || || || || || || || || || || || ||
co-payments or self-insurance. || ||
Risk retention is also known as __________ when the insured accepts the responsibility for the
|| || || || || || || || || || || || || || ||
loss before the insurance company pays. - ✔✔Self-insurance
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The purpose of retention is: - ✔✔1. to reduce expenses and improve cash flow
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2. to increase control of claim reserving and claims settlements
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3. to fund for losses that cannot be insured
|| || || || || || || ||
Risk Sharing - ✔✔a method of dealing with risk for a group of individual persons or businesses
|| || || || || || || || || || || || || || || || ||
with the same or similar exposure to loss to share the losses that occur within that group.
|| || || || || || || || || || || || || || || ||
, A __________ is a formal risk-sharing agreement. - ✔✔Reciprocal insurance exchange
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Risk Reduction - ✔✔actions taken to attempt to lessen the possibility or severity of a loss (ex:
|| || || || || || || || || || || || || || || || ||
installing smoke detectors, annual physicals, making lifestyle changes)
|| || || || || || ||
The most effective way to handle risk is to __________ it so that the loss is borne by another
|| || || || || || || || || || || || || || || || || || ||
party. - ✔✔Transfer || ||
Insurance is the most common method of __________ risk from an individual or group to an
|| || || || || || || || || || || || || || || ||
insurance company. Though the purchasing of insuranc will not eliminate the risk of death or
|| || || || || || || || || || || || || || ||
illness, it relieves the insured of the financial losses these risks bring. - ✔✔Transferring
|| || || || || || || || || || || || ||
Elements of Insurable Risks - ✔✔- Due to chance || || || || || || || ||
- Definite and measurable
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- Statistically predictable
|| ||
- Not catastrophic
|| ||
- Randomly selected and large loss exposure
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Insurable Risks Due to Chance - ✔✔a loss that is outside of the insured's control
|| || || || || || || || || || || || || ||
Insurable Risks that are Definite and Measurable - ✔✔a loss that is specific as to the cause, time,
|| || || || || || || || || || || || || || || || || ||
place and amount. An insurer must be able to determine how much the benefit will be when it
|| || || || || || || || || || || || || || || || || ||
becomes payable. ||
Insurable Risks that are Statistically Predictable - ✔✔insurers must be able to estimate the
|| || || || || || || || || || || || || ||
average frequency and severity of future losses and set appropriate premium rates
|| || || || || || || || || || ||
Insurable Risks that are Not Catastrophic - ✔✔insurers need to be reasonably certain their losses
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will not exceed specific limits because there is no statistical data that allows for the development
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of rates that would be necessary to cover losses from these events.
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