Insurance

Question 1

Insurable Risk Elements

Answer 1

1) There must be sufficiently large numbers of homogeneous exposure units to make losses reasonably predictable

2) The loss produced by the risk bust be definite and measurable

3) Loss must be fortuitous and Measurable

4) Loss must not be catastrophic to insurance company

Question 2

Self-Insurance Disadvantages

Answer 2

• Catastrophic loss to the company
• Replace services the insurance company would handle
• Possibility of high income taxes on self insurance fund
• Law of large numbers will not operate

Question 3

Avoidance of Risk

Answer 3

Renting instead of buying

Avoid buying a house with a pool

Question 4

Diversification of Risk

Answer 4

Store assets in different locations

Question 5

Retention of Risk

Answer 5

Deductibles on insurance

Coinsurance

Self-Insurance

Question 6

Reduction of Risk

Answer 6

Install Smoke detectors, House alarms

Safety Equipment

create safety programs for business

Question 7

Transfer of Risk

Answer 7

Insurance

Risk Sharing
- Harmless agreements
- Incorporation of business

Question 8

4 Principles of Indemnity

Answer 8

Insurable Interest

Concept of Actual Cash Value

Other Insurance (limit the ability to profit from loss)

Subrogation

Question 9

Tort

Answer 9

a wrongful act other than a breach of contract for which civil action may be brought against the Tortfeasor

Question 10

Intentional Tort

Answer 10

A deliberately performed act such as assault, battery, false arrest

Question 11

Unintentional Tort

Answer 11

Negligence or carelessness

Question 12

Attractive Nuisance

Answer 12

A situation in which high degree of care is imposed on the land occupier for certain conditions on the land

Ex. Pool that isn’t screened

Question 13

Negligence Per Se

Answer 13

a situation where the standards of care is set by a statute

ex. school zones and crosswalks

Question 14

Strict Liability

Answer 14

limited to manufactures and distributors of products found to be defective.

Ex. Romain lettuce with e. coli, Cars with defective parts, Pharmaceuticals that cause illness or death

Question 15

Absolute Liability

Answer 15

Extra hazardous conditions which result in losses to others

Ex. Keeping of wild animals, Workers comp.

Question 16

Vicarious Liability

Answer 16

When one person is held liable for another persons negligence.

Ex. a Manager is responsible for his agents

Question 17

Assumption of Risk

Answer 17

If one person recognizes and understands danger in an activity yet voluntarily chooses to encounter it. Another part CAN NOT be held responsible

Ex. Signing a waiver to do dangerous activity

Question 18

Contributory Negligence

Answer 18

Driving drunk or j-walking Defeats the claim to the injured

Question 19

Comparative Negligence

Answer 19

A Degree of negligence

-Injured was 20% negligent, Driver was 80% Negligent

Question 20

Last Clear Chance

Answer 20

Contributory negligence of the injured party will not bar recovery of damages

Not avoiding a risk even with ample amount of time

Ex. Not swerving when a car cuts you off even when you had time to avoid the crash

Question 21

Capital Retention/Preservation

Answer 21

Method presumes that only interest is distributed . The original capital is still left at the end of the income period.

5% Rule (or % of assume interest) - inflation

When a problem doesn’t give # of years assume capital Retenion

Question 22

Disability Typical Coverage amount

Answer 22

50-60% of earned income

Question 23

Workers Compensation is an Example of?

Answer 23

Absolute Liability

Question 24

Medicare Part A

Answer 24

Hospital insurance
- Hospitals Stays
- Post Hospital Extended Care
- Post Hospital Home Health Service
- Hospice
- Blood after the first 3 Pints

Question 25

Medicare Part B

Answer 25

Medical insurance
- Doctors Services
- Medical Test (Transfusions, X-Rays)
- Free Preventative Care (Cancer screening)
- Therapy

Question 26

Medicare Part D

Answer 26

Drug Manufactures must provide a discount

Does not apply to self Administered drugs

Question 27

Medicare Supplemental AKA Medigap Policy

Answer 27

Helps to pay deductibles and coinsurance

Only one per retiree

Must be Enrolled on Medicare Part A & B

Question 28

HMO

Answer 28

Employer Group Health plan Provides Health Care Services for a fixed Premium (Pre-paid)

Must use doctors provided by Gate Keeper not personal doctor

Question 29

PPO

Answer 29

Employer Group Health plan Provides Health Care Services Paid by a *fee-for-service.

Can use personal doctors outside the network

Question 30

COBRA

18 month and 36 month

Answer 30

Employers providing group or self-funded health coverage are required to offer terminated employees the right to buy continued health coverage

18M: Voluntary/Involuntary termination

36M:
- Death or divorce with depends
-Loss of dependents status (dependent becomes an adult)

Question 31

Pure Life Annuity

Answer 31

Provides periodic payments as long as the annuitant is living

Payments cease upon death

Question 32

Period Certain Annuity

Answer 32

Payments guaranteed for a certain time regardless the annuitant is living