New Mexico Life and Health
Exam Comprehensive
Questions with Verified
Answers Graded A+
Insurance - Answer: A method of spreading the result of financial loss among a large number
people.
Life Insurance - Answer: A contract under which one party (the insurer) in consideration of the
premium payment, agrees to pay an amount stipulated in the contract to a designated person
(the beneficiary) upon the occurrence of a contingency defined in the contract (usually that of
death).
Indemnity - Answer: The concept that insurance should restore the insured, in whole or in part,
to the condition he enjoyed before the loss.
Risk - Answer: The uncertainty of financial loss.
The 3 Types of Risk - Answer: 1) Pure Risk - there is only a chance of loss and there is no
possibility of gain.
2) Speculative Risk - involves both an uncertainty of loss and of gain.
3) Insurable Risk
, Insurable Risk - Answer: The more closely a risk align with the following characteristics, the
more insurable it is: Due to chance, measurable/predictable, it is based upon a large enough
pool, so that the law of large numbers allows for the accurate prediction of loss, and there must
be a significant potential for economic loss.
Methods of Handling Risk - Answer: -Avoidance
-Retention
-Sharing
-Reduction
Exposure - Answer: A measure of vulnerability of loss, usually expressed in dollars or units, to
which an insurance rate is applied.
Hazard - Answer: A specific situation that introduces or increases the probability of occurrence
of a loss.
The conditions that increase risk or the chance of a loss occurring: - Answer: Physical - arise
from material, structural, or operation features of a risk situation.
Moral - The Insured's habits.
Morale - Careless attitude on the part of the insured that increased the chance of loss.
Legal - Court of legislative actions increases the risk of loss.
Peril - Answer: The cause of a potential loss.
Loss - Answer: The happening of the event for which insurance pays.
The 4 Elements of a Legal Contract - Answer: 1) Offer and Acceptance
2) Consideration
Exam Comprehensive
Questions with Verified
Answers Graded A+
Insurance - Answer: A method of spreading the result of financial loss among a large number
people.
Life Insurance - Answer: A contract under which one party (the insurer) in consideration of the
premium payment, agrees to pay an amount stipulated in the contract to a designated person
(the beneficiary) upon the occurrence of a contingency defined in the contract (usually that of
death).
Indemnity - Answer: The concept that insurance should restore the insured, in whole or in part,
to the condition he enjoyed before the loss.
Risk - Answer: The uncertainty of financial loss.
The 3 Types of Risk - Answer: 1) Pure Risk - there is only a chance of loss and there is no
possibility of gain.
2) Speculative Risk - involves both an uncertainty of loss and of gain.
3) Insurable Risk
, Insurable Risk - Answer: The more closely a risk align with the following characteristics, the
more insurable it is: Due to chance, measurable/predictable, it is based upon a large enough
pool, so that the law of large numbers allows for the accurate prediction of loss, and there must
be a significant potential for economic loss.
Methods of Handling Risk - Answer: -Avoidance
-Retention
-Sharing
-Reduction
Exposure - Answer: A measure of vulnerability of loss, usually expressed in dollars or units, to
which an insurance rate is applied.
Hazard - Answer: A specific situation that introduces or increases the probability of occurrence
of a loss.
The conditions that increase risk or the chance of a loss occurring: - Answer: Physical - arise
from material, structural, or operation features of a risk situation.
Moral - The Insured's habits.
Morale - Careless attitude on the part of the insured that increased the chance of loss.
Legal - Court of legislative actions increases the risk of loss.
Peril - Answer: The cause of a potential loss.
Loss - Answer: The happening of the event for which insurance pays.
The 4 Elements of a Legal Contract - Answer: 1) Offer and Acceptance
2) Consideration
