Kentucky Life Exam Questions with 100% Correct Answers

Risk Correct Answer The uncertainty or chance of a loss occurring Pure Risk Correct Answer Refers to situations that can only result in a loss or no change. There is no opportunity for financial gain. It is the only type of risk that insurance companies are willing to accept. Speculative Risk Correct Answer Involves the opportunity for either loss or gain (Gambling). This type of risk is not insurable. Perils Correct Answer The causes of loss insured against in an insurance policy Life Insurance Correct Answer Insures against the financial loss cause by the premature death of the insured Health Insurance Correct Answer Insures against the medical expenses and/or loss of income caused by the insured's sickness or accidental injury Property Insurance Correct Answer Insures against the loss of physical property or the loss of its income-producing abilities Casualty Insurance Correct Answer Insures against the loss and/or damage of property resulting in liabilities Hazards Correct Answer Conditions or situations that increase the probability of an insured loss occurring. Physical Hazards Correct Answer Individual characteristics that increase the chances that cause of loss. Exist because of a physical condition, past medical history, or a condition at birth (blindness) Moral Hazards Correct Answer Tendencies towards increased risk. Involves evaluating the character and reputation of the proposed insured. Morale Hazards Correct Answer Similar to moral hazards, except that they arise from a state of mind that causes indifference to loss such as carelessness. Insurance Correct Answer Transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.