NEW MEXICO LIFE AND HEALTH EXAM 2024 WITH 100% CORRECT ANSWERS

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