Nebraska Life and Health Insurance Exam | Actual questions and answers | 100% verified

Nebraska Life and Health Insurance Exam | Actual questions and answers | 100% verified What is Insurance? - a contract in which 1 party (insurance company) agrees to indemnify (make whole) the insured party against loss, damage, or a liability arising from an unknown event. What is life insurance? - a policy that protects survivors from losses suffered after an insured's death What does insurance do? - transfers the risk of loss from an individual or business entity to an insurance company which spreads out costs of unexpected losses to many individuals What is risk? - uncertainty or chance of a loss occurring Pure risk - refers to sutuations that can only result in a loss or no change, no opportunity for financial gain What type of risk do insurance companies accept? - pure risk Speculative risk - involves opportunity for loss or gain Hazard - conditions or situation that increase probability of an insured loss occurring Physical hazard - individual characteristics that increase the chances of the cause of loss Example of a physical hazard - past medical history, existing conditions, (blindness) Moral hazard - tendencise towards increased risk. moral hazards inclove evaluating character of insured example of moral hazard - applicants who may lie on an application for insurance or in the past have submitted fraudulent claims against an insurer Morale hazard - similar to moral hazards, except that they arise from a state of mind that causes indifference to loss, such as carelessness example of morale hazard - actions taken without forethought may cause physical injuries Peril - perils are causes of loss insured against in an insurance policy Life Insurance - insures against the financial loss caused by the premature death of the insured Health Insurance - insures against mediacal expenses and/or loss of income caused by the insured's sickness or accidental injury Property Insurance - insures against the loss and/or damage of property and resulting in liabilities Loss - reduction, decrease or dissappearance of value of the person or property insured in a policy, caused by a named peril. Insurance provides means to transfer loss Exposure - is a unity of measure used to determine rates charged for insurance companies What are factors considered in determining rates for life insurance? - age of insured, medical history, occupation, sex Hom