LOMA 281 Module 1 Exam Questions With
Correct Answers
Risk |- |CORRECT |ANSWER✔✔-the |possibility |of |an |unexpected |result.
Premium |- |CORRECT |ANSWER✔✔-A |specified |amount |of |money |an |insurer |charges |in |
exchange |for |its |agreement |to |pay |a |policy |benefit |when |a |specific |loss |occurs.
Insurance |company |- |CORRECT |ANSWER✔✔-A |company |that |provides |protection |against |the |
risk |of |financial |loss |caused |by |specific |events.
Life |insurance |- |CORRECT |ANSWER✔✔-A |type |of |insurance |under |which |the |insurer |promises |
to |pay |a |death |benefit |upon |the |death |of |a |named |person.
Annuity |- |CORRECT |ANSWER✔✔-A |financial |product |by |which |an |insurer, |in |return |for |
receiving |a |premium, |promises |to |make |periodic |payments |to |a |named |person |or |entity.
Applicant |- |CORRECT |ANSWER✔✔-The |person |or |entity |that |applies |for |an |insurance |policy.
Policyowner |- |CORRECT |ANSWER✔✔-The |person |or |entity |that |owns |the |issued |policy.
Insured |- |CORRECT |ANSWER✔✔-The |person |whose |life |or |health |the |policy |insures.
Beneficiary |- |CORRECT |ANSWER✔✔-The |person |named |to |receive |the |policy |benefit |if |the |
insured |event |occurs.
, Third |party |policy |- |CORRECT |ANSWER✔✔-A |policy |one |person |purchases |that |insures |the |life |
of |another |person.
Speculative |risks |- |CORRECT |ANSWER✔✔-A |risk |that |involves |three |possible |outcomes: |loss, |
gain, |or |no |change.
Pure |risk |- |CORRECT |ANSWER✔✔-A |risk |that |involves |no |possibility |of |gain; |either |a |loss |
occurs |or |no |loss |occurs.
Contracts |of |indemnity |- |CORRECT |ANSWER✔✔-Health |insurance; |An |insurance |policy |under |
which |the |amount |of |the |policy |benefit |payable |for |a |covered |loss |is |based |on |the |actual |
amount |of |financial |loss |that |results |from |the |loss, |as |determined |at |the |time |of |the |loss.
Valued |contract |- |CORRECT |ANSWER✔✔-Life |insurance; |An |insurance |policy |that |specifies |the |
amount |of |the |policy |benefit |that |will |be |payable |when |a |covered |loss |occurs, |regardless |of |
the |actual |amount |of |the |loss |the |was |incurred.
Face |amount |- |CORRECT |ANSWER✔✔-the |amount |of |the |policy |benefit |listed |on |the |first |page
|of |a |life |insurance |policy.
Law |of |large |numbers |- |CORRECT |ANSWER✔✔-A |theory |of |probability |which |states |that, |
typically, |the |more |times |we |observe |a |particular |event, |the |more |likely |it |is |that |our |observed
|results |will |approximate |the |'true' |probability |that |the |event |will |occur.
Reinsurance |- |CORRECT |ANSWER✔✔-Insurance |that |one |insurance |company, |known |as |the |
direct |writer, |purchases |from |another |insurance |company, |known |as |the |reinsurer, |to |transfer |
risk |on |insurance |policies |that |the |direct |writer |has |issued.
Retention |limit |- |CORRECT |ANSWER✔✔-The |maximum |amount |of |insurance |that |an |insurer |is |
willing |to |carry |at |its |own |risk |on |any |one |life. |The |direct |writer |cedes |anything |above |that |
limit |to |a |reinsurer |in |a |reinsurance |transaction |or |through |other |risk |transfer |mechanisms.
Correct Answers
Risk |- |CORRECT |ANSWER✔✔-the |possibility |of |an |unexpected |result.
Premium |- |CORRECT |ANSWER✔✔-A |specified |amount |of |money |an |insurer |charges |in |
exchange |for |its |agreement |to |pay |a |policy |benefit |when |a |specific |loss |occurs.
Insurance |company |- |CORRECT |ANSWER✔✔-A |company |that |provides |protection |against |the |
risk |of |financial |loss |caused |by |specific |events.
Life |insurance |- |CORRECT |ANSWER✔✔-A |type |of |insurance |under |which |the |insurer |promises |
to |pay |a |death |benefit |upon |the |death |of |a |named |person.
Annuity |- |CORRECT |ANSWER✔✔-A |financial |product |by |which |an |insurer, |in |return |for |
receiving |a |premium, |promises |to |make |periodic |payments |to |a |named |person |or |entity.
Applicant |- |CORRECT |ANSWER✔✔-The |person |or |entity |that |applies |for |an |insurance |policy.
Policyowner |- |CORRECT |ANSWER✔✔-The |person |or |entity |that |owns |the |issued |policy.
Insured |- |CORRECT |ANSWER✔✔-The |person |whose |life |or |health |the |policy |insures.
Beneficiary |- |CORRECT |ANSWER✔✔-The |person |named |to |receive |the |policy |benefit |if |the |
insured |event |occurs.
, Third |party |policy |- |CORRECT |ANSWER✔✔-A |policy |one |person |purchases |that |insures |the |life |
of |another |person.
Speculative |risks |- |CORRECT |ANSWER✔✔-A |risk |that |involves |three |possible |outcomes: |loss, |
gain, |or |no |change.
Pure |risk |- |CORRECT |ANSWER✔✔-A |risk |that |involves |no |possibility |of |gain; |either |a |loss |
occurs |or |no |loss |occurs.
Contracts |of |indemnity |- |CORRECT |ANSWER✔✔-Health |insurance; |An |insurance |policy |under |
which |the |amount |of |the |policy |benefit |payable |for |a |covered |loss |is |based |on |the |actual |
amount |of |financial |loss |that |results |from |the |loss, |as |determined |at |the |time |of |the |loss.
Valued |contract |- |CORRECT |ANSWER✔✔-Life |insurance; |An |insurance |policy |that |specifies |the |
amount |of |the |policy |benefit |that |will |be |payable |when |a |covered |loss |occurs, |regardless |of |
the |actual |amount |of |the |loss |the |was |incurred.
Face |amount |- |CORRECT |ANSWER✔✔-the |amount |of |the |policy |benefit |listed |on |the |first |page
|of |a |life |insurance |policy.
Law |of |large |numbers |- |CORRECT |ANSWER✔✔-A |theory |of |probability |which |states |that, |
typically, |the |more |times |we |observe |a |particular |event, |the |more |likely |it |is |that |our |observed
|results |will |approximate |the |'true' |probability |that |the |event |will |occur.
Reinsurance |- |CORRECT |ANSWER✔✔-Insurance |that |one |insurance |company, |known |as |the |
direct |writer, |purchases |from |another |insurance |company, |known |as |the |reinsurer, |to |transfer |
risk |on |insurance |policies |that |the |direct |writer |has |issued.
Retention |limit |- |CORRECT |ANSWER✔✔-The |maximum |amount |of |insurance |that |an |insurer |is |
willing |to |carry |at |its |own |risk |on |any |one |life. |The |direct |writer |cedes |anything |above |that |
limit |to |a |reinsurer |in |a |reinsurance |transaction |or |through |other |risk |transfer |mechanisms.
