Nature of Insurance Flashcards
A condition or situation that create or increases a chance of loss
Hazard
3 examples of hazards are_,_,__
physical,poor,health overweight
moral,dishonesty, drugs, alcohol use
morale: attitude causes an indifference to loss
___ is th unintentional decrease in the value of an asset sue to peril( death)
Loss
___ is an immediate , specific event that causes dealth
Peril
___ can be reffeed to as the accident itsself
peril
__ is the potential for the loss
Risk
______presents the chance for loss or gain
speculative risk
___ are not insurable
speculative risk
Name the elements of insurable risks(7)
chance mesuarable predictable catastophic must be large randomly selected
___allows for prediction ios individual and group losses based on past experiences and an increased degree of accuracy in predicting losses in large groups
law of large numbers
___ is insuring similar objects of insurance that are exposed tosame group of perils(specific event ie hail damage)
Homogeneous exposure units
__ is defined as the tendency for poorer risk to seek out insurance
adverse selection
__ is the process of analyzing exposure that create risk and design programs to handle tem
risk managemnet
__ is to minimize the potential loss
reduction
__ is accepting the risk and confronting it if it occurs
retention
__ when a large group of people spreads risk to a small certain cost
risk pooling
To avoid the risk altogether
avoidance
__ to make someone else responsible for a loss
transference
The insurer transfers the loss it is a contractual arrangement that transfers exposure from one insurer to another insurer
reinsurance
__ is to calculate the value of a persons lif e based on computing the value of future earings
human life value approch
__ is based on the money needed for current or future expenses
needs based value approch
