- Study guides, Class notes & Summaries

Risk Sharing - Answer a way of helping to ensure that a loss does not spell financial ruin for a person or business Insurance - Answer *a mechanism for sharing the losses of the few among the many *the undertaking by one person to indemnify another person against loss or liability for loss Risk - Answer chance of financial loss as a result of loss or damage that the object of insurance may be exposed to Personal risk - Answer the risk of injury to body resulting...

Chapter 1 - Intro - Answer List the 5 functions of insurance: - Answer 1) Spread of risk 2) Basis of credit system 3) Eliminate worry and develop entrepreneurship 4) Loss reduction and prevention (road safety, alarms, etc.) 5) Employment opportunity Definition of insurance (3 parts) - Answer 1) insurance provides a means of shifting ones financial responsibility from a loss to another party ii) payment will be made only in the event of the happening of a certain ris...

Main purpose of Insurance - Answer Allow the spread of risk Definition of Insurance - Answer -Payment's made only when a certain peril has damaged the insured object -Payment's limited to actual amount of loss, no more and no less -There's no payment for losses that are deliberately caused by an insured. Five important points to the definition of insurance: - Answer -Spread of Risk -Basis of Credit System -Eliminates Worry/Encourages Entrepreneurship -Loss P...

Identify three major categories of insurance needs. - Answer 1. Personal Risk. e.g. Health or Life. 2. Property Risk. e.g. Loss of owned property. 3. Liability Risk. e.g. Action leading to others loss. Identify four options an insured may use in dealing with risk. (Which is least practical?) - Answer 1. Avoidance of Risk. e.g. Selling your store. Least practical. 2. Controlling of Risk. e.g. Installing alarms. 3. Retention of Risk. e.g. Opting out of Employee Dishonesty covera...

Identify 3 work-related benefits provided by workers compensation plans - Answer Any necessary health care costs Any necessary medical and vocational rehabilitation programs Replacement for lost earnings for time missed from work Death benefit Indicate who would purchase an individual accident and sickness insurance policy - Answer Self employed People who do not have a group plan at their place of work High income employees People seeking better coverage terms t...

Identify four persons including the definition of "you' or "your" and who would be Insureds under the policy. - Answer Spouse or common law living in the same household, relatives of either spouse or insured, any person under 21 in the care of named insured, and students can be over the age of 21 and living away from home but must be attending full-time education. Name three ways in which a spouse or common-law partner may qualify for coverage. - Answer A spouse or com...

Explain the role of the property and casualty Insurance compensation corporation when an insurer becomes insolvent. - Answer When a bankruptcy occurs and claims cannot be paid; the corporation pays all valid claims. All participating insurance companies have been charged an assessment to cover the total amount of the claims. The amount of each Insurance contribution is based on total direct premiums written by it. Maximum of $250,000 for a single occurrence. A refund of up to 70% of unearn...

Identify three major categories of insurance needs. - Answer Personal Risk Property Risk Liability Risk Identify four options an insured may use in dealing with risk. - Answer Avoidance of risk Controlling of risk Retention of risk Transfer of risk What what option of dealing with risk is the least practical? - Answer Avoidance of risk There are two types of risk. Identify them and provide a brief description for each. - Answer Speculative Risk ...

The major function of insurance is to achieve a spread of risk. Explain what is meant by "spread of risk" - Answer to share the losses of a few among the many Explain, Insurance provides a means of shifting one's financial responsibility for a loss to another party - Answer Insurance provides them with a means of shifting these obligations to others in exchange for money, referred to as premiums. A contract will be in place Explain, payment will be made only in the eve...

What is the major function of insurance? - Answer to allow the spread of risk What are the five important functions of insurance? - Answer 1) insurance is the shifting of financial responsibility for a loss 2) payment will be made only in the event of an insured risk 3) the amount of payment is restricted to the amount required to indemnify the insured 4) insurance covers losses the object may be exposed to 5) the indemnity can be in the form of money or repair/replacement ...