Life & Health Insurance Exam - NY
States
What is insurance? - ANS1.Insurance is a contract that indemnifies* another against loss,
damage, or liability arising from an unknown event.
2.Insurance is a social devices for spreading the chance of financial loss among a large
number of people.
3.By purchasing insurance, a person shares risk with a group of others, reducing individual
potential for disastrous financial consequences.
*Indemnify means to make a person whole by restoring that person to the same financial
position that existed before the loss.
Who is insured? - ANSPolicy Owner = Person who's purchase the insurance.
Who is insurer? - ANSInsurance company.
What is premium? - ANSA set amount of money that insured paid to insurer. Agreement
(contract or policy) between the insurer and the insured.
What is loss? - ANSReduction in the value of an asset.
What is claim? - ANSClaim is a demand for payment of the insurance benefit to the person
named in the policy.
Risk - ANSRisk is uncertainly of financial loss, or the chance of loss, when more than one
outcome.
Pure Risk - ANSPure risk means that there is only a chance of loss. The loss may or may
not happen and there is an possible for gain.
Speculative Risk - ANSSpeculative risk means both an uncertainty of loss and of gain.
Insurance does not protect individual against losses arising out of speculative risk because
these risk are undertaken voluntarily.
Peril - ANSPeril means immediate specific event causing loss and giving rise to risk.
For examples: building burns, fire is peril; person dies, death is the peril
Hazard - ANSHazard is any factor that gives rise to a peril. For the purposes of life insurance
there are there basic types of hazards: Physical, moral, and morale.
States
What is insurance? - ANS1.Insurance is a contract that indemnifies* another against loss,
damage, or liability arising from an unknown event.
2.Insurance is a social devices for spreading the chance of financial loss among a large
number of people.
3.By purchasing insurance, a person shares risk with a group of others, reducing individual
potential for disastrous financial consequences.
*Indemnify means to make a person whole by restoring that person to the same financial
position that existed before the loss.
Who is insured? - ANSPolicy Owner = Person who's purchase the insurance.
Who is insurer? - ANSInsurance company.
What is premium? - ANSA set amount of money that insured paid to insurer. Agreement
(contract or policy) between the insurer and the insured.
What is loss? - ANSReduction in the value of an asset.
What is claim? - ANSClaim is a demand for payment of the insurance benefit to the person
named in the policy.
Risk - ANSRisk is uncertainly of financial loss, or the chance of loss, when more than one
outcome.
Pure Risk - ANSPure risk means that there is only a chance of loss. The loss may or may
not happen and there is an possible for gain.
Speculative Risk - ANSSpeculative risk means both an uncertainty of loss and of gain.
Insurance does not protect individual against losses arising out of speculative risk because
these risk are undertaken voluntarily.
Peril - ANSPeril means immediate specific event causing loss and giving rise to risk.
For examples: building burns, fire is peril; person dies, death is the peril
Hazard - ANSHazard is any factor that gives rise to a peril. For the purposes of life insurance
there are there basic types of hazards: Physical, moral, and morale.
