Georgia Life, Accident, & Sickness Exam Study Guide with Complete Solutions

Georgia Life, Accident, & Sickness Exam Study Guide with Complete Solutions Insurance - Correct Answer ️️ -A social device for spreading the chance of financial loss among a large number of people. A method of transferring risks to the insurance company. Risk - Correct Answer ️️ -Shared by all those people buying like coverage's Types of Risk? - Correct Answer ️️ -Speculative and Pure Speculative Risk - Correct Answer ️️ -Gambling. Insurance DOES NOT cover this. Insurance is not meant to provide the opportunity for a gain. Pure Risk - Correct Answer ️️ -The type of loss insurance covers Valued Contract - Correct Answer ️️ -Pays stated amount in the event of the occurrence. EX: Life Insurance Reimbursement Contract - Correct Answer ️️ -Based on the loss you will be paid back a certain amount. EX: Health Insurance, Disability Insurance, Auto Insurance Description of Insurance - Correct Answer ️️ -A large uncertain loss (death, disability) is exchanged for a small certain loss (premium). The agreement is between the insurer (the company) and the policy owner (may or may not be the insured) is established in a legal contract, called a policy. The contract promises to pay a claim if a loss occurs. If a loss occurs the beneficiary will file a claim. Who is involved with a Policy? - Correct Answer ️️ -Applicant, Policy Owner, Insured, Beneficiary, Insurer, Third party contract Applicant - Correct Answer ️️ -Person applying for insurance Policy Owner - Correct Answer ️️ -Pays the bill. Has all ownership of rights Insured - Correct Answer ️️ -Person whose life is covered in the policy Beneficiary - Correct Answer ️️ -The person named to receive the proceeds upon the death of the insured. (THIS CAN BE ANYONE YOU WANT) Insurer - Correct Answer ️️ -The company Third Party Contract - Correct Answer ️️ -A policy that is owned by someone other than the insured. EX: a husband buys insurance on his wife or a parent buys insurance on a child. What creates risk? - Correct Answer ️️ -Peril and Hazard Peril - Correct Answer ️️ -Is the cause of the loss. EX: fire, flood, accident Hazard - Correct Answer ️️ -Anything that increases the chance of loss Moral Hazard - Correct Answer ️️ -liar, misrepresents oneself (Ends in an L for LIAR) Morale Hazard - Correct Answer ️️ -bad attitude, careless, a risk taker (ends in an E attitude ends in an E) EX: speeding ticket, DUI, bad credit Method of Managing Risks - Correct Answer ️️ -Transfer Buying Insurance - Correct Answer ️️ -The risk of the loss is transferred to the insurer and it is shared by other insured's that have similar characteristics, like