Chapter 2 Insurance Categories and Functions Flashcards
How can insurance be an aid to credit?
a. By reducing or preventing losses
b. By being a source of employment for many Canadians
c. By substituting a certain premium payment in place of an uncertain loss payment
d. By being virtually impossible to obtain credit without having insurance on the item concerned
d. By being virtually impossible to obtain credit without having insurance on the item concerned
How can insurance be an aid to security?
a. By reducing or preventing losses
b. By being a source of employment for many Canadians
c. By substituting a certain premium payment in place of an uncertain loss payment
d. By being virtually impossible to obtain credit without having insurance on the item concerned
c. By substituting a certain premium payment in place of an uncertain loss payment
Insurance provides peace of mind by substituting a certain premium payment in place of an uncertain loss payment.
How can risk be spread?
a. By volume, diversity of risks, and diversity of location
b. By premium, rate, and indemnity
c. By volume, premium, and diversity of location
d. By diversity of risks, premium, and indemnity
a. By volume, diversity of risks, and diversity of location
Sales representatives’ samples are an example of which type of general insurance?
Select one:
a. Real property
b. Commercial property floater
c. Crime
d. Personal effects float
b. Commercial property floater
Commercial property floaters cover portable items of a commercial nature. There are many different floaters of this type, including sales representatives’ samples.
What does it mean to indemnify?
a. To determine what price the insurer should charge for providing each class of coverage
b. To provide compensation for loss or expenses incurred
c. To calculate the premium an insured should pay
d. To review an application for insurance and decide whether to cover the risk
b. To provide compensation for loss or expenses incurred
To indemnify means to provide compensation for loss or expenses incurred. To put the person in the same financial position they were in prior to the even that caused the loss
What is premium?
a. Financial contributions that compensate the members of a group
b. The amount paid to a broker as commission
c. The amount paid to the provincial insurance regulator for tax purposes
d. Financial contributions pooled by the insurer to pay the losses of the few
d. Financial contributions pooled by the insurer to pay the losses of the few
Insurance is a method of collecting financial contributions (premiums) from all members of a group, and then using that accumulated pool of money to pay funds to the unfortunate few who suffer certain identified types of losses.
What is the specific risk covered by life insurance?
a. The death of the insured
b. The death of the beneficiary
c. The bankruptcy of the insured
d. The lapse of the policy
a. The death of the insured
Life insurance covers the death of the insured.
What is unearned premium?
a. The part of the premium that has not been used or earned; premium representing the unexpired portion of a policy
b. The portion of premium earned or charged for the period of time a policy remained effective
c. The penalty charged for cancelling an insurance policy early
d. The cost for insuring a category of risk
a. The part of the premium that has not been used or earned; premium representing the unexpired portion of a policy
Unearned premium is the part of the premium that has not been used or earned; premium representing the unexpired portion of a policy.
What type of insurance covers goods in transit on land?
a. Aviation
b. Marine
c. Inland transportation
d. Fire
c. Inland transportation
Inland transportation insurance covers goods in transit on land.
What type of insurance would cover losses arising from libel and slander?
a. Crime insurance
b. Accident insurance
c. Liability insurance
d. Surety bonds
c. Liability insurance
Liability insurance covers the entire spectrum from personal liability to liability resulting from ownership of premises, operations, products, rendering of professional services, libel, slander, and virtually any other situation where one individual might hold another responsible for some action or lack of action that resulted in injury or damage to that individual or that person’s property.
List the three ways to spread the risk
Volume
Diversity of type of risk
Diversity of location
List the secondary Functions of Insurance
Aiding security
Aiding credit
Promoting loss prevention
Providing capital
Providing employment
List 5 types of General Insurance
Accident
Automobile
Aviation
Business Interruption
Casualty
Commercial Property
Crime
Cyber
Extended coverage
File
Floater
Homeowners, tenant
Inland transportation
Legal expenses
Liability
Marine
Personal articles
Real property(dams, wharves, pipeline, Cell Towers)
What is insurance
Insurance is a method of collection financial contributions (premiums) from all members of a group, and then using that cumulated pool of money to pay funds to the unfortunate few who suffer certain indemnified types of losses.
What is the primary function of insurance
The primary function of insurance is to spread risk
