Insurance Flashcards

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1
Q

Risk Transfer

A
  • Insurance
  • Hold harmless agreements/hedging contracts
  • Incorporation of your business
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2
Q

Risk Retention (risk financing)

A
  • Deductibles in insurance policies
  • Coinsurance in insurance policies
  • Self-Insurance
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3
Q

Risk Reduction (risk control)

A
  • Install sprinkler system, smoke detectors, burglar alarm for home
  • Create safety programs for business
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4
Q

Risk Diversification (risk control)

A

-Store assets at different locations

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5
Q

Risk Avoidance (risk control)

A
  • Instead of purchasing property, you rent

- Avoid buying a house with a swimming pool

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6
Q

Risk Transfer

A
  • High Loss / Severity

- Low Loss / Frequency

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7
Q

Risk Avoidance

A
  • High Loss Severity

- High Loss Frequency

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8
Q

Risk Retention & Reduction

A
  • Low Loss Severity

- High Loss Frequency

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9
Q

Risk Retention

A
  • Low Loss Severity

- Low Loss Frequency

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10
Q

Indemnity

A

Make Whole

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11
Q

Basic Rules of Risk Management

A
  • Coverage for potential catastrophes should be purchased first (life, disability, health, homeowners, and auto.)
  • Severity is more important than probability
  • High probability will mean high premiums or a decline of coverage by the carrier
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12
Q

Rescission

A

Contract is deemed null from its beginning due to fraud, misrepresentation, concealment or mutual mistake

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13
Q

Parts of Insurance Contract - DDICE

A
  • Declarations Page
  • Definititions
  • Insurance Agreements
  • Conditions
  • Exclusions
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14
Q

Carve-Out Plans

A
  • Split Owner
  • IRS Section 162 bonus plan
  • DBO (Death Benefit Only)
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