Insurance Chapter 2 (Characteristics)

Question 1

Is the chance of a loss or no loss occurring.

Answer 1

Pure Risk

Question 2

• Determining the objectives of the risk management program
• Identifying the risks to which the individual is exposed
• Evaluating the identified risks for the probability and severity of the loss
• Determining the alternatives for managing the risks
• Selecting the most appropriate alternative for each risk
• Implementing the risk management plan selected
• Periodically evaluating and reviewing the risk management program

Answer 2

Risk Management Process

Question 3

(Amount of Insurance Carried/Amount of Insurance Required) x Covered Loss - Deductible = Amount Insurer Pays

Answer 3

Coinsurance Formula

Question 4

Take it or leave it contract

Answer 4

Adhesion

Question 5

The dollar amounts exchanged between the insured and the insurer are unequal.

Answer 5

Aleatory

Question 6

In that there is only one promise made, and it is made by the insurer to pay the beneficiary in the event of a covered loss.

Answer 6

Unilateral

Question 7

The insured must abide by all the terms and conditions of the contract if the insured intends to collect under the policy.

Answer 7

Conditional