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Insurance State Exam > General insurance > Flashcards

General insurance Flashcards

1
Q

What is the rate at which accident, sickness, or disability will occur?

A

Morbidity

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2
Q

What is the unintentional decrease in value of an asset due to a peril?

A

Loss

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3
Q

What is risk pooling?

A

Spreading a risk over a large group of people by substituting a small cost

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4
Q

What do we call the predicting of the approximate number of deaths or the likelihood of disability that will occur among a certain group duringa certain period called?

A

Law of Large Numbers

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5
Q

What is the item insured in the policy?

A

exposure unit

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6
Q

What is the uncertainty regarding financial loss?

A

RISK

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7
Q

What is speculative risk?

A

Involves both the chances of a loss or gain

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8
Q

What is the only risk that is insurable?

A

Pure Risks

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9
Q

What is the condition of being prone to loss due to a hazard or uncertain event called?

A

Exposure

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10
Q

What are the 3 basic types of hazards?

A

Physical, moral, morale

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11
Q

What are the 6 elements that make pure risks insurable?

A

LOSS must be due to chance, definite and measurable, loss exposure to be insured must be large, randomly selected, loss must be predictable, cann be catostrophic

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12
Q

What is the immediate specific event that causes a loss?

A

Peril

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13
Q

What gives rise to a peril?

A

Hazard

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14
Q

What is the total amount the insurer will pay for an insured risk?

A

Limit of liability

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15
Q

What are the 5 options to handle risk?

A

Avoidance, reduction, retention, transferance, and sharing (ARRTS)

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16
Q

What is a company that helps an insurance company transfer a portion of its risk?

A

Reinsurer

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17
Q

What is the purpose of a stock company?

A

To make a profit for the stockholders

18
Q

What are the aspects of a mutual company?

A

Owned by policyholders who get dividends

19
Q

What is a dividend?

A

Refund of overpayment on premiums

20
Q

What is insurance that is offered through the individual market?

A

Private Insurance

21
Q

What is the entity that assumes the risk?

A

Insurer

22
Q

What are the 3 examples of rating services that demonstrate the financial strength and stability of insurance companies?

A

AM Best, Standard and Poor’s, and Moody&Fitch

23
Q

Who are people who sell, solicit, and negotiate insurance?

A

Producer

24
Q

What is it called when one illegally converts another person’s funds for own use?

A

embezzlement

25
Q

Who regulates the insurance industry?

A

States

26
Q

What is needed for a contract to be legally valid and binding?

A

Offer, acceptance, consideration, compentent parties, and a legal purpose

27
Q

Who is the person who has all the ownership rights under the policy?

A

Policyowner

28
Q

What are the rights and responsibilities of all parties of the contract?

A

Conditions

29
Q

What is it called whe nthe values exchanged are not equal?

A

Aleatory

30
Q

When only one parties prepares the contract it is called?

A

Adhesion

31
Q

What is the type of contract that only reimburses or pays the amount of the loss?

A

Indemnity

32
Q

What is called when information is guarenteed to be true?

A

Warranty

33
Q

What is it called when information is believed to be true?

A

Representation

34
Q

What is it calle when both parties are trusted to reveal relevant facts?

A

Upmost good faith

35
Q

What kind of contract pays a stated amount in the event of a loss?

A

Valued contracts

36
Q

who selects, classifies, and rates risk?

A

Underwriters

37
Q

What is defined as the possiblity of a loss occuring?

A

RISK

38
Q

What are the 5 other reports an underwriters could use in determining applicants insurability?

A

Medical Report, MIB, Special questionaire, inspection report, credit report

39
Q

Who is the person covered undre the policy?

A

Insured

40
Q

What is adverse selection?

A

Less than favorable risks to seek or continue insurance to a greater extent than people in good faith

41
Q

What is a policy issued for a group insurance?

A

Master contract

42
Q

How many employees must participate in a non-contributory plan?

A

100% of eligible employees

Insurance State Exam (2 decks)

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