Basic Principles of Life and Health Insurance Flashcards
Dividends payable to a policy owner are
declared by the insurance company
What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?
Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called:
reserves
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the:
Fair Credit Reporting Act
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:
Fraternity benefit society
Which of the following can be defined as a cause of a loss?
Peril
The law of large numbers enables an insurer to
predict losses
Which of the following involves sharing an uncertain risk with another similar group?
Transfer
How can an insurance company minimize exposure to loss?
Reinsuring risk
Risk ____ is the process of analyzing exposures that create risk and designing programs to handle them.
management
What type of risk involves the potential for loss with no possibility for gain?
Pure risk
A condition that increases the possibility of financial loss is called a(n)
Hazard
A hold-harmless clause is an example of risk
transfer
ABC Company is attempting to minimize the severity of potential losses within its company. The company is engaged in risk
reduction
According to the law of large numbers, how would losses be affected if the number of similar insured units increases?
Predictability of losses will be improved
