HS 311 Fundamentals of Insurance Planning –
Questions With Correct Solutions
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (394)
What is the definition of "risk"? the possibility of loss.
Types of hazards? Physical, attitudinal (carelessness), and moral.
How do insurance companies measure By observing large numbers (mass) of similar
probabilities? (homogeneous) exposures in the statistical group
from which they make their estimate.
What is the definition of "particular Loss possibilities that affect only individuals or small
risk"? groups of individuals at the same time
What is the definition of "fundamental Loss possibilities that can affect large segments of
risk"? society at the same time.
,What is the definition of "pure risk"? Loss or no loss
What is the definition of "speculative Possibility of loss, no loss, or gain
risk"?
Pure risk categories include? Risks involving the person, risks involving loss of or
damage to property, and risks involving liability for
injury or damage to persons or the property of others.
5 requirements that a risk must meet? Important, accidental nature, calculable, definite, and
cannot be excessively catastrophic.
What is an indirect loss? Lost profits following a direct loss.
3 factors that add to the costs of risks? Fear and worry, inadequate preparation, and
expenses of managing risks.
Insurance can be defined from the Economic, legal, business, social, and actuarial.
following viewpoints?
Economic viewpoint of insurance? Insurance reduces risk by transferring risks to an
insurer, who combines policy owners' potential losses
Legal viewpoint of insurance? Insurance transfers risk by the terms of a contract
Business viewpoint of insurance? Insurance is a financial institution specializing in the
treatment of risk
Social viewpoint of insurance? Insurance pools losses by using group members'
contributions to pay losses suffered by some group
members.
Actuarial viewpoint of insurance? Insurance predicts and distributes losses using
actuarial estimates based on principles of probability.
,Common elements of insurance? Risk transfer, Risk spreading, indemnification, ability to
make reasonable estimates of future losses, ability to
express losses in definite amounts, and possibility of
adverse, random events occurring outside insured's
control.
The cost of insurance include? Operating costs, insurer profits, opportunity costs,
possible increased losses, and adverse selection.
Individual insurance underwriting Evidence of insurability.
typically requires the individual to
show ...?
What is a peril? Cause of loss.
What is a hazard? Acts or conditions that increase the chance or amount
of loss caused by a peril.
Moral hazards are...? Dishonest tendencies.
To use a probability to measure risk, A large number of similar exposures would be
what is needed? needed.
Can pure loss be effectively hedged No
against?
What is adverse selection? The natural tendency for those who know they are
highly vulnerable to loss from a specific risk to be
most inclined to acquire and retain insurance to cover
that loss.
Employees covered under group Certificate of insurance.
insurance receive what as evidence of
their coverage?
, Risk management goals include? Survival, peace of mind, lower costs (or higher net
income), stable earnings, minimal interruption of
business operations or personal life, continued
growth, and satisfaction of social responsibility with a
good public image.
A risk manager has full responsibility in identifying and evaluating risks, selecting insurers,
the property and liability area for...? approving insurance renewals and amounts,
negotiating insurance rates, seeking competitive
insurance bids, keeping insurance records, choosing
deductibles, and handling insurance claims
A risk manager shares responsibility Deciding whether or not to insure or retain (including
for...? self-insuring) financial risks, selecting insurance agents
and brokers, instituting safety programs, and
reviewing contracts other than insurance.
Deductibles lower insurance premiums The relatively high claims costs associated with small
by eliminating ...? losses.
Family or business retained risks are Absorption in current operating expenses or family
commonly financed by...? budgets, and emergency funding and reserves.
Business' also employ self-insurance through a formal
program of risk retentions and captive
insurers(separate subsidiary insurance companies
established to write the parent company's insurance).
An insurer receives income from...? Premiums (or insurance payments from policy
owners), investment earnings, and other income.
The uses for income (that an insurer Covered losses, the cost of doing business, or
receives)? expenses, and profits (which may be used to pay
dividends or held as retained earnings)
Questions With Correct Solutions
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (394)
What is the definition of "risk"? the possibility of loss.
Types of hazards? Physical, attitudinal (carelessness), and moral.
How do insurance companies measure By observing large numbers (mass) of similar
probabilities? (homogeneous) exposures in the statistical group
from which they make their estimate.
What is the definition of "particular Loss possibilities that affect only individuals or small
risk"? groups of individuals at the same time
What is the definition of "fundamental Loss possibilities that can affect large segments of
risk"? society at the same time.
,What is the definition of "pure risk"? Loss or no loss
What is the definition of "speculative Possibility of loss, no loss, or gain
risk"?
Pure risk categories include? Risks involving the person, risks involving loss of or
damage to property, and risks involving liability for
injury or damage to persons or the property of others.
5 requirements that a risk must meet? Important, accidental nature, calculable, definite, and
cannot be excessively catastrophic.
What is an indirect loss? Lost profits following a direct loss.
3 factors that add to the costs of risks? Fear and worry, inadequate preparation, and
expenses of managing risks.
Insurance can be defined from the Economic, legal, business, social, and actuarial.
following viewpoints?
Economic viewpoint of insurance? Insurance reduces risk by transferring risks to an
insurer, who combines policy owners' potential losses
Legal viewpoint of insurance? Insurance transfers risk by the terms of a contract
Business viewpoint of insurance? Insurance is a financial institution specializing in the
treatment of risk
Social viewpoint of insurance? Insurance pools losses by using group members'
contributions to pay losses suffered by some group
members.
Actuarial viewpoint of insurance? Insurance predicts and distributes losses using
actuarial estimates based on principles of probability.
,Common elements of insurance? Risk transfer, Risk spreading, indemnification, ability to
make reasonable estimates of future losses, ability to
express losses in definite amounts, and possibility of
adverse, random events occurring outside insured's
control.
The cost of insurance include? Operating costs, insurer profits, opportunity costs,
possible increased losses, and adverse selection.
Individual insurance underwriting Evidence of insurability.
typically requires the individual to
show ...?
What is a peril? Cause of loss.
What is a hazard? Acts or conditions that increase the chance or amount
of loss caused by a peril.
Moral hazards are...? Dishonest tendencies.
To use a probability to measure risk, A large number of similar exposures would be
what is needed? needed.
Can pure loss be effectively hedged No
against?
What is adverse selection? The natural tendency for those who know they are
highly vulnerable to loss from a specific risk to be
most inclined to acquire and retain insurance to cover
that loss.
Employees covered under group Certificate of insurance.
insurance receive what as evidence of
their coverage?
, Risk management goals include? Survival, peace of mind, lower costs (or higher net
income), stable earnings, minimal interruption of
business operations or personal life, continued
growth, and satisfaction of social responsibility with a
good public image.
A risk manager has full responsibility in identifying and evaluating risks, selecting insurers,
the property and liability area for...? approving insurance renewals and amounts,
negotiating insurance rates, seeking competitive
insurance bids, keeping insurance records, choosing
deductibles, and handling insurance claims
A risk manager shares responsibility Deciding whether or not to insure or retain (including
for...? self-insuring) financial risks, selecting insurance agents
and brokers, instituting safety programs, and
reviewing contracts other than insurance.
Deductibles lower insurance premiums The relatively high claims costs associated with small
by eliminating ...? losses.
Family or business retained risks are Absorption in current operating expenses or family
commonly financed by...? budgets, and emergency funding and reserves.
Business' also employ self-insurance through a formal
program of risk retentions and captive
insurers(separate subsidiary insurance companies
established to write the parent company's insurance).
An insurer receives income from...? Premiums (or insurance payments from policy
owners), investment earnings, and other income.
The uses for income (that an insurer Covered losses, the cost of doing business, or
receives)? expenses, and profits (which may be used to pay
dividends or held as retained earnings)
