215 Insurance License Exam
risk pooling - --ANSWER---spreading risk
over a large group of people
law of large numbers - --ANSWER---
larger the group, the more certain the
predictions
,speculative risk - --ANSWER---not
insurable - involves both chance of loss
or gain
pure risk - --ANSWER---insurable -
involves chance of loss, never gain or
profit
peril - --ANSWER---event causing loss
Ex: fire, death, accident, windstorm,
disease
hazard - --ANSWER---any factor that
gives rise to peril or increase likelihood
of a loss from a peril
, physical hazard - --ANSWER---slippery
floor, blindness, deafness, past medical
history
moral hazard - --ANSWER---intentional
act, tendencies to take risks;
Ex: alcoholism, drugs, dishonesty
morale hazard - --ANSWER---
carelessness, indifference
Ex: driving recklessly with no fear of
injury
risk avoidance - --ANSWER---avoiding the
risk, don't do anything
Ex: choosing not to drive, fly or invest
(not practical)
risk pooling - --ANSWER---spreading risk
over a large group of people
law of large numbers - --ANSWER---
larger the group, the more certain the
predictions
,speculative risk - --ANSWER---not
insurable - involves both chance of loss
or gain
pure risk - --ANSWER---insurable -
involves chance of loss, never gain or
profit
peril - --ANSWER---event causing loss
Ex: fire, death, accident, windstorm,
disease
hazard - --ANSWER---any factor that
gives rise to peril or increase likelihood
of a loss from a peril
, physical hazard - --ANSWER---slippery
floor, blindness, deafness, past medical
history
moral hazard - --ANSWER---intentional
act, tendencies to take risks;
Ex: alcoholism, drugs, dishonesty
morale hazard - --ANSWER---
carelessness, indifference
Ex: driving recklessly with no fear of
injury
risk avoidance - --ANSWER---avoiding the
risk, don't do anything
Ex: choosing not to drive, fly or invest
(not practical)
