Life Insurance Washington | Questions and Answers with complete

Pure Risk - Refers to situations that can only result in a loss or no change. There's no opportunity for financial gain. Only type of risk that insurance companies are willing to accept. Speculative Risk - Opportunity for either loss or gain (e.g. gambling). Not insurable. Hazards - Conditions/situations that increase the probability of an insured loss occurring (i.e. lifestyle/health or scuba diving). How are hazards classified? - Physical, moral, morale. Physical Hazards - Individual characteristics that increase the chances of the cause of loss (i.e. physical condition, past medical history, condition at birth). Moral Hazards - Tendencies towards increased risk. Involve evaluating the character/reputation of the proposed insured. Applicants who may lie on an application for insurance, or in the past have submitted fraudulent claims against an insurer. Morale Hazards - Arise from state of mind that causes indifference to loss, such as carelessness. Actions taken without forethought may cause physical injuries. Peril - The causes of loss insured against in an insurance policy. Loss - Reduction, decrease, disappearance of value of the person/property insured in a policy caused by a named peril. Sharing - Method of dealing w/ risk for a group of individuals/businesses w/ the same or similar exposure to loss to share the losses that occur within that group (reciprocal insurance exchange)