Oklahoma life and health Insurance Questions with
Detailed Verified Answers (100% Correct Answers)
/Already Graded A+
Sharing Answer: Sometimes, when a risk cannot be avoided and retention
would involve too much exposure to loss, we may choose risk sharing as a
means of handling the risk. By sharing risk with someone else, an individual
also shares potential losses. That is, the individual's own loss may not be as
great if it occurs, but the individual may have to pay a portion of the losses
experienced by others.
Transfer Answer: Risk transfer means transferring the risk of loss to another
party, usually an insurance company, that is more willing or able to bear the
risk. Some non-insurance transfers of risk occur, such as when one agrees to
assume the risk of another under the terms of a written contract.
Avoidance Answer: As the name implies, this technique deals with risk by
avoiding the risk in the first place. This usually means not undertaking an
activity that could involve the chance of loss. For example, by never flying, one
could eliminate the risk of being in an airplane crash.
Reduction Answer: Sometimes, when risks cannot be avoided, they can be
reduced. Risk reduction can work in one of two ways: it can reduce the chance
that a particular loss will occur, or it can reduce the amount of a potential loss
if it occurs. For example, installing a smoke alarm in a home would not lesson
the possibility of fire, but it would reduce the risk of the loss from the fire.
Retention Answer: Retention simply means doing nothing about the risk. In
other words, people assume or retain the risk and, in effect, become self-
insurers. For example, the insured would pay a smaller portion of the loss than
the insurer, such as paying a deductible.
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, Law of Large Numbers Answer: Basic principle of insurance that the larger the
number of individual risks combined into a group, the more certainty there is
in predicting the degree or amount of loss that will be incurred in any given
period.
Insurable Intrest Answer: Requirement of insurance contracts that loss must
be sustained by the applicant upon the death or disability of another and loss
must be suf cient to warrant compensation.
Indemnity Answer: insurance should restore the insured, in whole or in part, to
the condition the insured enjoyed before the loss. Restoration may take the
form of payment for the loss or repair or replacement of the damaged or
destroyed property.
Subrogation Answer: Subrogation entitles one who has paid for another's loss
to take over the other's right to recourse from the party responsible for the
loss.
Deductible Answer: simply the initial amount of a covered loss (or losses) that
the insured must absorb before the insurer begins to pay for additional loss
amounts.
Elimination Period Answer: or a waiting period. The elimination period is
simply the number of days an insured must be disabled before disability
income benefits become payable.
coinsurance (percentage participation) Answer: Principle under which the
company insures only part of the potential loss, the policyowners paying the
other part. For instance, in a major medical policy, the company may agree to
pay 75% of the insured expenses, with the insured to pay the other 25%
Property insurance Answer: protects the insured against the financial
consequences of the direct or consequential loss or damage to property of
© 2025 Get it right Stuvia US All rights reserved
Detailed Verified Answers (100% Correct Answers)
/Already Graded A+
Sharing Answer: Sometimes, when a risk cannot be avoided and retention
would involve too much exposure to loss, we may choose risk sharing as a
means of handling the risk. By sharing risk with someone else, an individual
also shares potential losses. That is, the individual's own loss may not be as
great if it occurs, but the individual may have to pay a portion of the losses
experienced by others.
Transfer Answer: Risk transfer means transferring the risk of loss to another
party, usually an insurance company, that is more willing or able to bear the
risk. Some non-insurance transfers of risk occur, such as when one agrees to
assume the risk of another under the terms of a written contract.
Avoidance Answer: As the name implies, this technique deals with risk by
avoiding the risk in the first place. This usually means not undertaking an
activity that could involve the chance of loss. For example, by never flying, one
could eliminate the risk of being in an airplane crash.
Reduction Answer: Sometimes, when risks cannot be avoided, they can be
reduced. Risk reduction can work in one of two ways: it can reduce the chance
that a particular loss will occur, or it can reduce the amount of a potential loss
if it occurs. For example, installing a smoke alarm in a home would not lesson
the possibility of fire, but it would reduce the risk of the loss from the fire.
Retention Answer: Retention simply means doing nothing about the risk. In
other words, people assume or retain the risk and, in effect, become self-
insurers. For example, the insured would pay a smaller portion of the loss than
the insurer, such as paying a deductible.
© 2025 Get it right Stuvia US All rights reserved
, Law of Large Numbers Answer: Basic principle of insurance that the larger the
number of individual risks combined into a group, the more certainty there is
in predicting the degree or amount of loss that will be incurred in any given
period.
Insurable Intrest Answer: Requirement of insurance contracts that loss must
be sustained by the applicant upon the death or disability of another and loss
must be suf cient to warrant compensation.
Indemnity Answer: insurance should restore the insured, in whole or in part, to
the condition the insured enjoyed before the loss. Restoration may take the
form of payment for the loss or repair or replacement of the damaged or
destroyed property.
Subrogation Answer: Subrogation entitles one who has paid for another's loss
to take over the other's right to recourse from the party responsible for the
loss.
Deductible Answer: simply the initial amount of a covered loss (or losses) that
the insured must absorb before the insurer begins to pay for additional loss
amounts.
Elimination Period Answer: or a waiting period. The elimination period is
simply the number of days an insured must be disabled before disability
income benefits become payable.
coinsurance (percentage participation) Answer: Principle under which the
company insures only part of the potential loss, the policyowners paying the
other part. For instance, in a major medical policy, the company may agree to
pay 75% of the insured expenses, with the insured to pay the other 25%
Property insurance Answer: protects the insured against the financial
consequences of the direct or consequential loss or damage to property of
© 2025 Get it right Stuvia US All rights reserved
