LOUISIANA EXAMINATION FOR LIFE, HEALTH, AND
ACCIDENT OR SICKNESS INSURANCE-SERIES 103
Insurance Producer - Answer -A person required to be licensed under the laws of
Louisiana to sell, solicit, or negotiate insurance.
Business Entity - Answer -Is a corporation, association, partnership, limited liability
company, limited liability partnership or other legal entity. Business entity that to sell,
solicit, or negotiate insurance. Must be licensed.
Domestic Insurer - Answer -is formed under the law of Louisiana
Insurer - Answer -The company providing coverage.
Insured - Answer -The individual whose life or health is covered under the insurance
policy.
Insurance Policy - Answer -The legal contract outlining the terms of coverage.
Policyowner/Policyholder - Answer -The individual or business purchasing the
insurance.
Premium - Answer -The payment required to keep the policy active.
Typically paid monthly but can also be paid quarterly, semiannually, or annually.
Claim - Answer -A formal request for payment after a covered loss.
Required for compensation from the insurance company.
Life Insurance - Answer -Provides a financial payout to beneficiaries after the insured's
death.
Health Insurance - Answer -Covers medical expenses, including treatments, surgeries,
and preventive care.
Disability Insurance - Answer -Replaces income if the insured becomes unable to work
due to injury or illness.
Property Insurance - Answer -Covers damage to property from events like fire or theft.
Liability Insurance - Answer -Protects against legal claims for bodily injury or property
damage.
Long-Term Care Insurance - Answer -Covers extended care services, such as nursing
home care.
, Principles of Insurance - Answer -Insurance relies on two core principles to maintain
financial stability
-Risk Pooling
-Law of large Numbers
Risk Pooling - Answer -Policyholders contribute premiums to a shared fund that covers
losses for those who experience a covered event
Law of Large Numbers - Answer -The larger the insured group, the more predictable
the loss patterns, helping insurers calculate premiums accurately.
Pure Risk (Insurable) - Answer -Involves only the potential for loss, such as injury or
illness
Since pure risk presents a definite chance of loss without the possibility of profit, it is the
type of risk insurance companies cover.
Speculative Risk (Not Insurable) - Answer -Involves the chance of gain or loss, such as
gambling.
Risk Avoidance - Answer -Eliminating activities that present a risk (e.g., not driving a
motorcycle).
Risk Reduction: - Answer -Minimizing risk through proactive measures (e.g., wearing a
seatbelt).
Risk Retention - Answer -Accepting and managing the risk personally, often through
self-insurance.
Risk Transference - Answer -Shifting financial risk to an insurer by purchasing
coverage.
Preferred Risk - Answer -Low risk with healthier applicants, leading to lower premiums.
Standard Risk - Answer -Average risk with typical health factors, qualifying for standard
rates.
Substandard Risk - Answer -Higher-than-average risk due to health conditions or
hazardous activities, often leading to higher premiums or coverage exclusions.
Declined Risk - Answer -Applicants whose risk is too high for coverage due to extreme
health conditions or dangerous activities.
Peril - Answer -The direct cause of a loss, such as fire or theft.
ACCIDENT OR SICKNESS INSURANCE-SERIES 103
Insurance Producer - Answer -A person required to be licensed under the laws of
Louisiana to sell, solicit, or negotiate insurance.
Business Entity - Answer -Is a corporation, association, partnership, limited liability
company, limited liability partnership or other legal entity. Business entity that to sell,
solicit, or negotiate insurance. Must be licensed.
Domestic Insurer - Answer -is formed under the law of Louisiana
Insurer - Answer -The company providing coverage.
Insured - Answer -The individual whose life or health is covered under the insurance
policy.
Insurance Policy - Answer -The legal contract outlining the terms of coverage.
Policyowner/Policyholder - Answer -The individual or business purchasing the
insurance.
Premium - Answer -The payment required to keep the policy active.
Typically paid monthly but can also be paid quarterly, semiannually, or annually.
Claim - Answer -A formal request for payment after a covered loss.
Required for compensation from the insurance company.
Life Insurance - Answer -Provides a financial payout to beneficiaries after the insured's
death.
Health Insurance - Answer -Covers medical expenses, including treatments, surgeries,
and preventive care.
Disability Insurance - Answer -Replaces income if the insured becomes unable to work
due to injury or illness.
Property Insurance - Answer -Covers damage to property from events like fire or theft.
Liability Insurance - Answer -Protects against legal claims for bodily injury or property
damage.
Long-Term Care Insurance - Answer -Covers extended care services, such as nursing
home care.
, Principles of Insurance - Answer -Insurance relies on two core principles to maintain
financial stability
-Risk Pooling
-Law of large Numbers
Risk Pooling - Answer -Policyholders contribute premiums to a shared fund that covers
losses for those who experience a covered event
Law of Large Numbers - Answer -The larger the insured group, the more predictable
the loss patterns, helping insurers calculate premiums accurately.
Pure Risk (Insurable) - Answer -Involves only the potential for loss, such as injury or
illness
Since pure risk presents a definite chance of loss without the possibility of profit, it is the
type of risk insurance companies cover.
Speculative Risk (Not Insurable) - Answer -Involves the chance of gain or loss, such as
gambling.
Risk Avoidance - Answer -Eliminating activities that present a risk (e.g., not driving a
motorcycle).
Risk Reduction: - Answer -Minimizing risk through proactive measures (e.g., wearing a
seatbelt).
Risk Retention - Answer -Accepting and managing the risk personally, often through
self-insurance.
Risk Transference - Answer -Shifting financial risk to an insurer by purchasing
coverage.
Preferred Risk - Answer -Low risk with healthier applicants, leading to lower premiums.
Standard Risk - Answer -Average risk with typical health factors, qualifying for standard
rates.
Substandard Risk - Answer -Higher-than-average risk due to health conditions or
hazardous activities, often leading to higher premiums or coverage exclusions.
Declined Risk - Answer -Applicants whose risk is too high for coverage due to extreme
health conditions or dangerous activities.
Peril - Answer -The direct cause of a loss, such as fire or theft.
