Fundamentals of Insurance - Self Exam Q & A (2022/2023) Rated A+

Fundamentals of Insurance - Self Exam Q & A (2022/2023) Rated A+ Main purpose of Insurance Allow the spread of risk Definition of Insurance -Payment's made only when a certain peril has damaged the insured object -Payment's limited to actual amount of loss, no more and no less -There's no payment for losses that are deliberately caused by an insured. Five important points to the definition of insurance: -Spread of Risk -Basis of Credit System -Eliminates Worry/Encourages Entrepreneurship -Loss Prevention and Loss Reduction -Source of Employment and Investment Capital Five important points as they relate to the definition of insurance: -Provides a means of shifting one's financial responsibility for loss to another party -Payment made only in the event of the happening of a certain risk or peril -Payment restricted to amount required to indemnify insured -Covers losses to which the object of insurance 'may' be exposed -Indemnity can be in the form of money or other thing of value Three types of insurance included within the broad area of 'Property and Casualty Insurance': -Auto Insurance -Property Insurance -Liability Insurance Two major types of insurers: Private Insurers Stock Companies -operate via private funds or public sale of stock -main goal to generate profit for shareholders (owners) Mutual Companies -owned by its policy holders -main goal to provide insurance to its policy holders at as low a cost as possible -profits returned to policy via dividends or rate adjustments Two major types of insurers: Government Insurers -Medical insurance -employment insurance -workers' compensation -mandatory auto insurance (Sask, BC, MB and QC) Three methods used by insurers to sell their products: