Intro to Life Insurance

Question 1

Risk

Answer 1

Uncertainty or chance of loss occuring

Question 2

Pure risk

Answer 2

Refers to situations that can only result in a loss or no change.

Question 3

What is the only type of risk covered by insurance?

Answer 3

Pure risk

Question 4

What are the two types of risk?

Answer 4

Pure and Speculative

Question 5

Speculative risk

Answer 5

Involves the opportunity for either loss or gain.

Question 6

What is an example of Speculative risk

Answer 6

Gambling

Question 7

Perils

Answer 7

Causes of loss insured against an insurance policy

Question 8

Hazard

Answer 8

Conditions or situations that increase the probability of an insured loss happening.

Question 9

What are the three types of hazards

Answer 9

Physical, Moral, and Morale

Question 10

What can cause a physical hazard

Answer 10

Physical condition, past medical problems, and illnesses at birth (blindness)

Question 11

What is insurance

Answer 11

Transfer of a risk to the insurer.

Question 12

What is a moral hazard

Answer 12

Involve evaluating the character and reputation of a proposed insured

Question 13

If a applicant lies on an application for insurance or in the past and submit a fraud claim what hazard is this?

Answer 13

Moral

Question 14

A hazard that arises from a state of mind that causes indifferences to loss, such as carelessness.

Answer 14

Morale

Question 15

What is the only risk insurance covers

Answer 15

Pure

Question 16

How can you have an insurable risk

Answer 16

Accident outside the insured’s control

Question 17

Elements of insurable risk

Answer 17

due to chance,definite and measurable, statiscally preditable, not catastrophic, randomly selected/ large loss exposure

Question 18

elements of legal contract

Answer 18

agreement between 2 parties with offer and acceptance,consideration