EXAM FX 1 ACTUAL TEST PAPER QUESTIONS CORRECT ANSWERS GRADED A PLUS.pdf

EXAM FX 1 ACTUAL TEST PAPER QUESTIONS CORRECT ANSWERS GRADED A PLUS




Question:
Insurance

Answer:
Transfers the risk of loss from an individual or business entity to an insurance company



Question:
The three elements of insurable risk are

Answer:
1) Financial 2) Blood (relative) 3) Business



Question:
Risk

Answer:
The uncertainty or chance of a loss occurring



Question:
Types of risks are

Answer:
1) Pure risk 2) Speculative risk



Question:
What type of risk does insurance cover?

Answer:

,Pure risk



Question:
What is pure risk?

Answer:
It can only result in a loss or no change



Question:
What type of risk is not insurable?

Answer:
speculative risk



Question:
What is speculative risk?

Answer:
Opportunity for loss or gain. For example, gambling.



Question:
What is a peril?

Answer:
a specific cause of loss



Question:
What is a hazard?

Answer:
conditions or situations that increase the probability of a loss occurring

, Question:
What is a loss?

Answer:
reduction, decrease or disappearance of value of the person or property insured.



Question:
What is indemnity?

Answer:
provision in an insurance policy that states that in the event of loss, an insured can only collect to the
extent of the financial loss. The insured is not allowed to gain financially.



Question:
Subrogation

Answer:
insurer's legal right to seek damages from third parties after it has reimbursed the insured.



Question:
Accident

Answer:
The sudden, unplanned and unexpected event not under the control of the insured. Neither expected
or intended.



Question:
Occurrence

Answer:
losses caused by continuous or repeated exposure to conditions neither intended or expected.