Chapter 15 Insurance Company Flashcards

1
Q

policies provide protection against untimely death or illness, and/or transfer wealth through time to retirement

A

Life Insurance

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2
Q

protects against personal injury and liability associated with specific events

A

Property and Casualty Insurance

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3
Q

assess and price risk

A

Insurance Underwriters

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4
Q

sell insurance contracts

A

Insurance Brokers

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5
Q

is the problem that customers who apply for insurance policies are more likely to be those in need of coverage

A

adverse selection problem

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6
Q

occurs when, after an insurer and a customer enter into an insurance contract, the insured engages in risky behavior because the risk is covered

A

Moral Hazard

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7
Q

premiums are invested in market securities

value of policy depends on the value of the securities

A

Variable Life Insurance Policy

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8
Q

are investment vehicles that liquidate a fund (pay investors) over a long period of time

A

Annuities

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9
Q

Insurance companies can attempt to share risks by buying insurance from other insurance companies

A

Reinsurance

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10
Q

a measure of overall profitability

equals the loss ratio plus LAE to premiums written plus commissions and other expenses to premiums written

A

Combined Ratio

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11
Q

a measure of overall profitability

equals the combined ratio minus the investment yield

A

Operating Ratio

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