Basics Of Insurance Flashcards
What is the primary purpose of insurance?
To provide financial protection against potential future losses.
Fill in the blank: Insurance is a _______ mechanism.
[risk management]
True or False: Insurance can completely eliminate risk.
False
What are the two main types of insurance?
- Life Insurance
- Property and Casualty Insurance
Define ‘premium’ in the context of insurance.
The amount paid by the insured to the insurer for coverage.
What does ‘deductible’ mean in insurance terms?
The amount the insured must pay out-of-pocket before coverage kicks in.
Fill in the blank: The process of evaluating the risk of insuring a person or entity is called _______.
[underwriting]
What is the purpose of a ‘policy’ in insurance?
To outline the terms, coverage, and conditions of the insurance agreement.
What is ‘coverage’ in insurance?
The extent of protection provided under the insurance policy.
What is meant by ‘exclusions’ in an insurance policy?
Specific conditions or circumstances that are not covered by the policy.
List three common types of property insurance.
- Homeowners Insurance
- Renters Insurance
- Commercial Property Insurance
True or False: Insurance companies invest the premiums they collect.
True
Define ‘beneficiary’ in the context of life insurance.
The person or entity designated to receive the death benefit.
What is ‘liability insurance’?
Coverage that protects against claims resulting from injuries and damage to people or property.
Fill in the blank: The total amount paid by an insurer for a claim is known as _______.
[loss payment]
What does ‘actuarial science’ involve?
The use of mathematical and statistical methods to assess risk in insurance.
List two factors that influence insurance premiums.
- Age
- Health Status
What does ‘claims process’ refer to in insurance?
The procedure through which an insured requests payment for a covered loss.
True or False: All insurance policies are the same.
False
What is ‘reinsurance’?
Insurance purchased by insurance companies to mitigate risk.
Define ‘underinsurance’.
Having insufficient coverage to completely protect against loss.
