WEBCE quiz questions with complete solutions

Risk CORRECT ANSWERS: chance of loss Loss CORRECT ANSWERS: an unplanned reduction in economic value What risk is insurable? CORRECT ANSWERS: pure risk What are the two types of risk? CORRECT ANSWERS: pure risk and speculative risk Involves the possibility of a loss? CORRECT ANSWERS: pure risk Can result in either loss or gain? CORRECT ANSWERS: speculative risk Loss CORRECT ANSWERS: an unplanned reduction in economic value Direct loss CORRECT ANSWERS: immediate result of an event involving an insured peril Indirect loss CORRECT ANSWERS: a loss that results from a direct loss Loss exposure CORRECT ANSWERS: being subject to possible loss Underwriting Process CORRECT ANSWERS: the process that determines if the risk proposed for insurance should be accepted or rejected Peril CORRECT ANSWERS: the direct cause of a loss and the event that insurance protects against Life & health insurance covered perils include: CORRECT ANSWERS: death, disability, & sickness Hazard CORRECT ANSWERS: a condition that increases the chance of loss due to a peril or increases the severity of a loss 3 categories of hazards CORRECT ANSWERS: moral hazards, morale hazards, & physical hazards Moral Hazards CORRECT ANSWERS: these are character weaknesses, habits, and risky activities that increase the possibility of loss Morale Hazards CORRECT ANSWERS: these are a state of mind or attitudes that create an indifference to loss Physical Hazards CORRECT ANSWERS: these are physical conditions that increase the chance of loss