Florida Insurance 2-15 Exam Terms
Complete Questions and Guide Answers
100% Verified Graded A+
1. Insurance
Answer: Financial protection against loss or harm - An arrangement by which company gives customers
financial protection against loss or harm such as theft or illness in return for premium payments.
2. Life Insurance
Answer: Is based on actuarial or mathematical principles and guarantees a specified sum of money upon the
death of the person who is insured.
3. Health Insurance
Answer: Evolved from scientific principles to provide funds for medical expensed due to sickness or injury and
to cover loss of income during disability
4. Annuities
Answer: Provide a stream of income by making a series of payments to the annuitant for the annuitant's
lifetime or for a specifically designated period of time.
,5. Risk
Answer: Uncertainty regarding loss; the probability of loss occurring for an insured or prospect
6. Speculative Risks
Answer: Involve the possibility of loss and gain. (Not Insurable)
7. Pure Risks
Answer: Involve the possibility of loss only. (Insurable)
8. Peril
Answer: Cause of risk (when a building burns, fire is the peril)
9. Hazards
Answer: The source of danger
10. Physical Hazard
Answer: A hazard being of physical nature.
A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness)
11. Risk Avoidance
Answer: Occurs when individuals evade risk entirely. "If you don't drive, then you avoid getting in an auto
accident."
12. Risk Reduction
Answer: Takes place when the chances of loss are lessened. Changing a lifestyle to minimize a known risk.
13. Risk Retention
,Answer: Being aware of the risks involved and taking precautions for financial protection. Auto policy's deductible is
an illustration of risk retention
14. Risk Transference
Answer: The act of shifting the responsibility of risk to another in the form of an insurance contract.
15. Adverse Selection
Answer: Refers to the tendency for those individuals who present less favorable insurance risk to seek or
continue insurance to a great extent than other risks.
16. Insuring Pure Risk
Answer: Loss must be due to chance Loss must be
definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
, 17. Mutual Insurers
Answer: Participating policies Owned by
policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
18. Assessment Mutual Insurers
Answer: Prohibited in Florida
19. Pure Assessment Mutual Company
Answer: Don't pay premium and total loss is divided among members
20. Lloyds of London
Answer: NOT considered an insurance company
- An association of individuals and companies that individually underwriter insurance.
21. Fraternal Benefit Societies
Answer: Must be nonprofit, have a lodge system, and otter insurance to its members only
22. Service Providers
Answer: Contract for and sell medical and hospital care services. Participants are known as subscribers.
23. Home Service Insurer
Complete Questions and Guide Answers
100% Verified Graded A+
1. Insurance
Answer: Financial protection against loss or harm - An arrangement by which company gives customers
financial protection against loss or harm such as theft or illness in return for premium payments.
2. Life Insurance
Answer: Is based on actuarial or mathematical principles and guarantees a specified sum of money upon the
death of the person who is insured.
3. Health Insurance
Answer: Evolved from scientific principles to provide funds for medical expensed due to sickness or injury and
to cover loss of income during disability
4. Annuities
Answer: Provide a stream of income by making a series of payments to the annuitant for the annuitant's
lifetime or for a specifically designated period of time.
,5. Risk
Answer: Uncertainty regarding loss; the probability of loss occurring for an insured or prospect
6. Speculative Risks
Answer: Involve the possibility of loss and gain. (Not Insurable)
7. Pure Risks
Answer: Involve the possibility of loss only. (Insurable)
8. Peril
Answer: Cause of risk (when a building burns, fire is the peril)
9. Hazards
Answer: The source of danger
10. Physical Hazard
Answer: A hazard being of physical nature.
A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness)
11. Risk Avoidance
Answer: Occurs when individuals evade risk entirely. "If you don't drive, then you avoid getting in an auto
accident."
12. Risk Reduction
Answer: Takes place when the chances of loss are lessened. Changing a lifestyle to minimize a known risk.
13. Risk Retention
,Answer: Being aware of the risks involved and taking precautions for financial protection. Auto policy's deductible is
an illustration of risk retention
14. Risk Transference
Answer: The act of shifting the responsibility of risk to another in the form of an insurance contract.
15. Adverse Selection
Answer: Refers to the tendency for those individuals who present less favorable insurance risk to seek or
continue insurance to a great extent than other risks.
16. Insuring Pure Risk
Answer: Loss must be due to chance Loss must be
definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
, 17. Mutual Insurers
Answer: Participating policies Owned by
policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
18. Assessment Mutual Insurers
Answer: Prohibited in Florida
19. Pure Assessment Mutual Company
Answer: Don't pay premium and total loss is divided among members
20. Lloyds of London
Answer: NOT considered an insurance company
- An association of individuals and companies that individually underwriter insurance.
21. Fraternal Benefit Societies
Answer: Must be nonprofit, have a lodge system, and otter insurance to its members only
22. Service Providers
Answer: Contract for and sell medical and hospital care services. Participants are known as subscribers.
23. Home Service Insurer
