Arizona Health Insurance Exam
Insurance correct answersa contract in which one party (the insurance
company) agrees to "make whole" the insured party against loss, damage
or liability arising from an unlikely event
In insurance, the policy protects survivors from losses suffered
after the insured's death correct answersLife
Insurance the risk of loss from an individual or business to an
insurance company correct answersTransfers
Risk correct answersthe uncertainty or chance of a loss occurring
Pure Risk correct answerssituations that can only result in a loss or no
change
In risk, there is no opportunity for financial gain correct
answersPure
risk is the only type of risk that insurance companies are willing
to accept correct answersPure
Speculative Risk correct answersinvolves the opportunity for loss or gain
risk is not insurable correct answersSpeculative
Exposure correct answersunit of measurement used to determine rates
charged for insurance coverage
4 Determining Factors in Life Insurance correct answers- Age of insured
- Medical history
- Occupation
- Sex of insured
Homogeneous correct answersa large number of units having the same
or similar exposure to loss
What is the basis of insurance? correct answersSharing the risk among
members of a large homogeneous group with similar exposure to loss
Hazards correct answersconditions or situations that increase the
probability of an insured loss occurring
,Physical Hazards correct answersindividual characteristics that increase the
chances of the cause of loss
hazards exist because of physical condition, past medical
history, or a condition at birth. correct answersPhysical
Moral Hazards correct answerstendencies towards increased risk
hazards involve evaluationg the character and reputation of the
proposed insured. correct answersMoral
refer to those applicants who may life on an application for
insurance, or in the past, have submitted fraudulent claims against an
insurer. correct answersMoral
Morale Hazards correct answersarise from a state of mind that causes
indifference to loss, such as carelessness and result from actions taken
without forethought.
Peril correct answersthe causes of loss insured against an insurance policy.
insures against the financial loss caused by premature
death of the insured. correct answersLife
insures against the medical expenses and/or loss of income
caused by the insured's sickness or accidental injury. correct answersHealth
insurance insures against the loss of physical property of
the loss of income producing abilities. correct answersProperty
insurance insures against the loss and/or damage of property
resulting in liabilities. correct answersCasualty
Loss correct answersthe reduction, decrease, or disappearance of value of
the person or property insured in a policy, caused by a named peril.
Risk Avoidance correct answerseliminating exposure to a loss
Risk avoidance is but seldom .
correct answersEffective/Practical
Risk Retention correct answersthe planned assumption of risk by an insured
throughthe use of deductibles, co-payments or self-insurance.
Risk retention is also known as when the insured accepts the
responsibility for the loss before the insurance company pays. correct
answersSelf-insurance
,The purpose of retention is: correct answers1. to reduce expenses and
improve cash flow
2. to increase control of claim reserving and claims settlements
3. to fund for losses that cannot be insured
Risk Sharing correct answersa method of dealing with risk for a group of
individual persons or businesses with the same or similar exposure to loss to
share the losses that occur within that group.
A is a formal risk-sharing agreement. correct answersReciprocal
insurance exchange
Risk Reduction correct answersactions taken to attempt to lessen the
possibility or severity of a loss (ex: installing smoke detectors, annual
physicals, making lifestyle changes)
The most effective way to handle risk is to it so that the loss is
borne by another party. correct answersTransfer
Insurance is the most common method of risk from an individual or
group to an insurance company. Though the purchasing of insuranc will not
eliminate the risk of death or illness, it relieves the insured of the financial
losses these risks bring. correct answersTransferring
Elements of Insurable Risks correct answers- Due to chance
- Definite and measurable
- Statistically predictable
- Not catastrophic
- Randomly selected and large loss exposure
Insurable Risks Due to Chance correct answersa loss that is outside of the
insured's control
Insurable Risks that are Definite and Measurable correct answersa loss that
is specific as to the cause, time, place and amount. An insurer must be able
to determine how much the benefit will be when it becomes payable.
Insurable Risks that are Statistically Predictable correct answersinsurers
must be able to estimate the average frequency and severity of future
losses and set appropriate premium rates
Insurable Risks that are Not Catastrophic correct answersinsurers need to be
reasonably certain their losses will not exceed specific limits because there is
no statistical data that allows for the development of rates that would be
necessary to cover losses from these events.
, Insurable Risks that are Randomly Selected and have Large Loss Exposure
correct answersthere must be a sufficiently large pool of the insured that
represents a random selection of risks in terms of age, gender, occupation,
health and economic status, and geographic location.
Adverse Selection correct answersthe insuring of risks that are more
prone to losses than the average risk
risks tend to seen insurance or file claims to a greater extent
than
risks. correct answersPoorer/Better
To protect themselves from , insurance companies have an option to
refuse or restrict coverage for bad risks, or charge them a higher rate for
insurance coverage. correct answersAdverse selection
Law of Large Numbers correct answersstates that the larger the number of
people with a similar exposure to loss, the more predictable actual losses
will be.
Which law forms the basis for statistical prediction of loss upon which
insurance rates are calculated? correct answersThe Law of Large Numbers
When an insurance company issues a policy of a 35 y/o male, the company
really has no way of kning or accurately predicting when he will die. So they
use the
to look at people who are the same age, sex and have similar health and
lifestyle conditions to make conclusions based on the statistics of past
losses. This allows the insurance company yo have a general idea about the
predicted time of death for this type of insured and to set the premiums
accordingly. correct answersLaw of Large Numbers
What is the major difference between government and private insurance?
correct answersThe government programs are funded with taxes and serve
national and state social purposes, while private policies are funded by
premiums.
What are the 5 ways that private insurance companies can be
classified? correct answers- Ownership
- Authority to transact busniess
- Location
- Marketing and distribution systems
- Rating (financial strength)
Stock Companies correct answersinsurance companies that are owned by
the stockholders who provide the capital necessary to establish and operate
the insurance company and who share in any profits or losses
Insurance correct answersa contract in which one party (the insurance
company) agrees to "make whole" the insured party against loss, damage
or liability arising from an unlikely event
In insurance, the policy protects survivors from losses suffered
after the insured's death correct answersLife
Insurance the risk of loss from an individual or business to an
insurance company correct answersTransfers
Risk correct answersthe uncertainty or chance of a loss occurring
Pure Risk correct answerssituations that can only result in a loss or no
change
In risk, there is no opportunity for financial gain correct
answersPure
risk is the only type of risk that insurance companies are willing
to accept correct answersPure
Speculative Risk correct answersinvolves the opportunity for loss or gain
risk is not insurable correct answersSpeculative
Exposure correct answersunit of measurement used to determine rates
charged for insurance coverage
4 Determining Factors in Life Insurance correct answers- Age of insured
- Medical history
- Occupation
- Sex of insured
Homogeneous correct answersa large number of units having the same
or similar exposure to loss
What is the basis of insurance? correct answersSharing the risk among
members of a large homogeneous group with similar exposure to loss
Hazards correct answersconditions or situations that increase the
probability of an insured loss occurring
,Physical Hazards correct answersindividual characteristics that increase the
chances of the cause of loss
hazards exist because of physical condition, past medical
history, or a condition at birth. correct answersPhysical
Moral Hazards correct answerstendencies towards increased risk
hazards involve evaluationg the character and reputation of the
proposed insured. correct answersMoral
refer to those applicants who may life on an application for
insurance, or in the past, have submitted fraudulent claims against an
insurer. correct answersMoral
Morale Hazards correct answersarise from a state of mind that causes
indifference to loss, such as carelessness and result from actions taken
without forethought.
Peril correct answersthe causes of loss insured against an insurance policy.
insures against the financial loss caused by premature
death of the insured. correct answersLife
insures against the medical expenses and/or loss of income
caused by the insured's sickness or accidental injury. correct answersHealth
insurance insures against the loss of physical property of
the loss of income producing abilities. correct answersProperty
insurance insures against the loss and/or damage of property
resulting in liabilities. correct answersCasualty
Loss correct answersthe reduction, decrease, or disappearance of value of
the person or property insured in a policy, caused by a named peril.
Risk Avoidance correct answerseliminating exposure to a loss
Risk avoidance is but seldom .
correct answersEffective/Practical
Risk Retention correct answersthe planned assumption of risk by an insured
throughthe use of deductibles, co-payments or self-insurance.
Risk retention is also known as when the insured accepts the
responsibility for the loss before the insurance company pays. correct
answersSelf-insurance
,The purpose of retention is: correct answers1. to reduce expenses and
improve cash flow
2. to increase control of claim reserving and claims settlements
3. to fund for losses that cannot be insured
Risk Sharing correct answersa method of dealing with risk for a group of
individual persons or businesses with the same or similar exposure to loss to
share the losses that occur within that group.
A is a formal risk-sharing agreement. correct answersReciprocal
insurance exchange
Risk Reduction correct answersactions taken to attempt to lessen the
possibility or severity of a loss (ex: installing smoke detectors, annual
physicals, making lifestyle changes)
The most effective way to handle risk is to it so that the loss is
borne by another party. correct answersTransfer
Insurance is the most common method of risk from an individual or
group to an insurance company. Though the purchasing of insuranc will not
eliminate the risk of death or illness, it relieves the insured of the financial
losses these risks bring. correct answersTransferring
Elements of Insurable Risks correct answers- Due to chance
- Definite and measurable
- Statistically predictable
- Not catastrophic
- Randomly selected and large loss exposure
Insurable Risks Due to Chance correct answersa loss that is outside of the
insured's control
Insurable Risks that are Definite and Measurable correct answersa loss that
is specific as to the cause, time, place and amount. An insurer must be able
to determine how much the benefit will be when it becomes payable.
Insurable Risks that are Statistically Predictable correct answersinsurers
must be able to estimate the average frequency and severity of future
losses and set appropriate premium rates
Insurable Risks that are Not Catastrophic correct answersinsurers need to be
reasonably certain their losses will not exceed specific limits because there is
no statistical data that allows for the development of rates that would be
necessary to cover losses from these events.
, Insurable Risks that are Randomly Selected and have Large Loss Exposure
correct answersthere must be a sufficiently large pool of the insured that
represents a random selection of risks in terms of age, gender, occupation,
health and economic status, and geographic location.
Adverse Selection correct answersthe insuring of risks that are more
prone to losses than the average risk
risks tend to seen insurance or file claims to a greater extent
than
risks. correct answersPoorer/Better
To protect themselves from , insurance companies have an option to
refuse or restrict coverage for bad risks, or charge them a higher rate for
insurance coverage. correct answersAdverse selection
Law of Large Numbers correct answersstates that the larger the number of
people with a similar exposure to loss, the more predictable actual losses
will be.
Which law forms the basis for statistical prediction of loss upon which
insurance rates are calculated? correct answersThe Law of Large Numbers
When an insurance company issues a policy of a 35 y/o male, the company
really has no way of kning or accurately predicting when he will die. So they
use the
to look at people who are the same age, sex and have similar health and
lifestyle conditions to make conclusions based on the statistics of past
losses. This allows the insurance company yo have a general idea about the
predicted time of death for this type of insured and to set the premiums
accordingly. correct answersLaw of Large Numbers
What is the major difference between government and private insurance?
correct answersThe government programs are funded with taxes and serve
national and state social purposes, while private policies are funded by
premiums.
What are the 5 ways that private insurance companies can be
classified? correct answers- Ownership
- Authority to transact busniess
- Location
- Marketing and distribution systems
- Rating (financial strength)
Stock Companies correct answersinsurance companies that are owned by
the stockholders who provide the capital necessary to establish and operate
the insurance company and who share in any profits or losses
