Life insurance exam |117
Questions and Answers
life insurance - -insurance that pays to a named beneficiary or the
deceased's estate upon the death of the insured,may b annuity or
endowment, may incl benef for accident death/dismemberment, disability,
protects against risk pf premature death which exposes a finNcial riskto
family or business. ie:burial expenses, pay debts, loss of family inc/business
profits
- insurance - -content that indemnifies another against loss, damage, liab
arising from unknown event
- indemnify - -make a person whole by restoring that person to the same
financial poistion that existed. 4 the loss
- insured - -policy owner
- premium - -set amount of money payable for policy/coverage
- insurance company - -insurer
- policy - -agreement insurer and insured, agreeement/contract
- loss - -reduction in value and asset
- claim - -demand for payment of insured benefit to person named in policy
- risk - -uncertainty of financial loss when one or more outcome is possible.
must be element of doubt and uncertainity
- pure risk - -only a chance of loss, only pure risk is insurable, risk
associated with chance of loss
- speculative risk - -involves both uncertain of loss and gain ie betting at a
race track/ investing in the stock market
- peril - -immediate specific event causing loss and giving rise to risk. ie
building burns as a result of "fire" or person dies as a result of "death"
- hazard - -fsctor that gives rise to peril
- three types of hazards - -physical, moral, morale
, - physical hazard - -arises from material, structural, or operational features
ie: unsanitary conditions slippery floors
- moral hazard - -arise from peoples habits or values (lying, cheating)
- morale hazard - -arises out of human negligence ie: dont wear seatbelt
- 5 ways to manage risks - -share transfer avoid reduction retention
- sharing risk - -when risk cannot be avoided& retention causes too much
exposure
- transfer risk - -move risk to another insurance co
- types of transfers - -non insurance and contract
- avoidance of risk - -abstenance
- reduction of risk - -smoke alarm to reduce potential loss
- retention of risk - -do nothing, assume part of risk yourself ie: deductible
- law of large numbers - -ins co cannot predict loss expected for a given
individual using this law, insurers can predict how many losses will occur
with this law
- exposure unit - -item of property or insured person
- insurable interest - -must have this to preserv life or property of insured
- insurable interest for life insurance - -must exist at time of app
notnecessary T time of death
- insurable risk - -large #s of homogenous units in order for pooling &
insurance mechanismsof insurance to function
- insurable risk - -loss must bemeasureable, place a specific amount tp
calculate premiums and claims settlement
- insurable risk - -loss must be uncertain not deliberate act of destruction
- insurable risk - -must be an econimic hardship must suffer significant loss
to your own self
- foreign insurer - -licensed to conduct business in states and dist of
columbia or other US territories other than the one it is inc
Questions and Answers
life insurance - -insurance that pays to a named beneficiary or the
deceased's estate upon the death of the insured,may b annuity or
endowment, may incl benef for accident death/dismemberment, disability,
protects against risk pf premature death which exposes a finNcial riskto
family or business. ie:burial expenses, pay debts, loss of family inc/business
profits
- insurance - -content that indemnifies another against loss, damage, liab
arising from unknown event
- indemnify - -make a person whole by restoring that person to the same
financial poistion that existed. 4 the loss
- insured - -policy owner
- premium - -set amount of money payable for policy/coverage
- insurance company - -insurer
- policy - -agreement insurer and insured, agreeement/contract
- loss - -reduction in value and asset
- claim - -demand for payment of insured benefit to person named in policy
- risk - -uncertainty of financial loss when one or more outcome is possible.
must be element of doubt and uncertainity
- pure risk - -only a chance of loss, only pure risk is insurable, risk
associated with chance of loss
- speculative risk - -involves both uncertain of loss and gain ie betting at a
race track/ investing in the stock market
- peril - -immediate specific event causing loss and giving rise to risk. ie
building burns as a result of "fire" or person dies as a result of "death"
- hazard - -fsctor that gives rise to peril
- three types of hazards - -physical, moral, morale
, - physical hazard - -arises from material, structural, or operational features
ie: unsanitary conditions slippery floors
- moral hazard - -arise from peoples habits or values (lying, cheating)
- morale hazard - -arises out of human negligence ie: dont wear seatbelt
- 5 ways to manage risks - -share transfer avoid reduction retention
- sharing risk - -when risk cannot be avoided& retention causes too much
exposure
- transfer risk - -move risk to another insurance co
- types of transfers - -non insurance and contract
- avoidance of risk - -abstenance
- reduction of risk - -smoke alarm to reduce potential loss
- retention of risk - -do nothing, assume part of risk yourself ie: deductible
- law of large numbers - -ins co cannot predict loss expected for a given
individual using this law, insurers can predict how many losses will occur
with this law
- exposure unit - -item of property or insured person
- insurable interest - -must have this to preserv life or property of insured
- insurable interest for life insurance - -must exist at time of app
notnecessary T time of death
- insurable risk - -large #s of homogenous units in order for pooling &
insurance mechanismsof insurance to function
- insurable risk - -loss must bemeasureable, place a specific amount tp
calculate premiums and claims settlement
- insurable risk - -loss must be uncertain not deliberate act of destruction
- insurable risk - -must be an econimic hardship must suffer significant loss
to your own self
- foreign insurer - -licensed to conduct business in states and dist of
columbia or other US territories other than the one it is inc
