Insurance

Question 1

LAW OF LARGE NUMBERS

Answer 1

THE LAW OF LARGE NUMBERS STATES THAT THE LARGER THE NUMBER OF PEOPLE WITH A SIMILIAR EXPOSURE TO LOSS, THE MORE PREDICTABLE THE LOSS WILL BE.
EXAMPLE: WHEN AN INSURANCE COMPANY ISSUES A POLICY TO A 35 YEAR OLD MAKE THEY HAVE NO ACCURATE WAY TO PREDICT WHEN HE WILL DIE, THE LAW OF LARGE NUMBERS LOOKS AT A LARGE GROUP WITH SIMILIAR RISKS.

Question 2

INSURABLE INTREST

Answer 2

THE INSURED MUST HAVE AN INSURABLE INTREST IN THE PERSON OR PROPERTY COVERED BY AN INSURANCE.
3 ELEMENTS OF INSURABLE RISK ARE : FINANCIAL, BLOOD, BUSINESS.
iN PROPERTY AND CASUALTY INSURANCE, INSURABLE INTEREST MUST EXIST AT THE TIME OF THE LOSS.

Question 3

RISK

Answer 3

RISK IS THE UNCERTAINTY OR CHANCE OF A LOSS OCCURING. THE TWO TYPES OF RISK ARE PURE AND SPECULATIVE.

Question 4

PURE RISK

Answer 4

REFERS TO SITUATIONS THAT CAN ONLY RESULT IN LOSS OR NO CHANGE. THERE IS NO OPPERTUNITY FOR FINCIAL GAIN. PURE RISK IS THE ONLY TYPE OF RISK INSURANCE COMPANIES ARE WILLING TO ACCEPT.

Question 5

SPECULATIVE RISK

Answer 5

INVOLVES THE OPPERTUNITY FOR WITHER LOSS OR GAIN. AN EXAMPLE OF SPECULATIVE RISK IS GAMBLING. THESE TYPES OF RISK ARE NOT INSURABLE.

Question 6

PERIL

Answer 6

PERILS ARE THE CAUSE OF LOSS INSURED AGAINST IN AN INSURANCE POLICY.

Question 7

LIFE INSURANCE

Answer 7

INSURES AGAINST THE FINICIAL LOSS CAUSED BY PREMATURE DEATH OF THE INSURED

Question 8

HEALTH INSURANCE

Answer 8

INSURES AGAINST THE MEDICAL EXPENSES AND OR LOSS OF INCOME CAUSED BY THE INSURED’S SICKNESS OR ACCIDENTAL INJURY.

Question 9

PROPERTY INSURANCE

Answer 9

INSURES AGAINT THE LOSS OF PHYSICAL PROPERTY OR THE LOSS OF ITS INCOME PRODUCING ABILITIES.

Question 10

CASUALTY INSURANCE

Answer 10

INSURES AGAINST THE LOSS AND OR DAMAGE OF PROPERTY AND RESULTING LIABILITIES.

Question 11

HAZARDS

Answer 11

ARE CONDITIONS OR SITUATIONS THAT INCREASE THE PROBILITY OF AN INSURED LOSS OCCURING.

Question 12

PHYSICAL HAZARD

Answer 12

ARE THOSE ARISING FROM THE MATERIAL, STRUCTURAL OR OPERATIONAL FEATURES OF THE RISK APART FROM THE PERSONS OWNING OR MANAGING IT.

Question 13

MORAL HAZARDS

Answer 13

REFER TO THOSE APPLICANTS THAT MAY LIE ON THE APPLICATION FOR INSURANCE, OR IN THE PAST, HAVE SUBMITTED FRADULENT CLAIMS AGAINST AN INSURER.

Question 14

MORALE HAZARDS

Answer 14

REFERS TO AN INCREASE IN THE HAZARD PRESENTED BY A RISK. ARISING FROM THE INSURED INDIFFERENCE TO LOSS BECAUSE OF THE EXISTINCE OF INSURANCE.

Question 15

IDEMNITY

Answer 15

SOMETIMES REFERED TO AS REIMBERSEMENT IS A PROVISION IN AN INSURANCE POLICY THAT STATES THAT IN THE EVENT OF A LOSS AN INSURED OR A BENEFICIARY IS PERMITTED TO COLLECT ONLY TO THE EXTENT OF THE FINANCIAL LOSS AND IS NOT ALLOWED TO GAIN FINANCIALY.

Question 16

SUBROGATION

Answer 16

THE INSURE’S LEGAL RIGHT TO SEEK DAMAGES FROM 3RD PARTIES, AFTER IT HAS REIMBURED THE INSURED FOR THE LOSS. PREVENTS THE INSURED FROM COLLECTING TWICE ON THE LOSS.

Question 17

ACCIDENT VS OCCURANCE

ACCIDENT

Answer 17

AN ACCIDENT IS A SUDDEN UNPLANNED UNEXPECTED EVENT, NOT UNDER THE CONTROL OF THE INSURED RESULTING IN INJURY OR LOSS

Question 18

OCCURANCE

Answer 18

AN OCCURENCE IS A BROADER DEFINATION OF LOSS THAN ACCIDENT BECAUSE IT INCLUDES THOSE LOSSES BY CONTINUOUS OR REPEATED EXPOSURE TO CONDITONS RESULTING IN INJURY TI A PERSONS OR DAMAGE TO PROPERTY THAT IS NEITHER INTENDED NOR EXPECTED

Question 19

DIRECT AND INDIRECT LOSS

Answer 19

TWO TYPES OF LOSS THAT IN INDIVIDUAL OR BUSINESS