Nature of Insurance

Question 1

A condition or situation that create or increases a chance of loss

Answer 1

Hazard

Question 2

3 examples of hazards are_,_,__

Answer 2

physical,poor,health overweight
moral,dishonesty, drugs, alcohol use
morale: attitude causes an indifference to loss

Question 3

___ is th unintentional decrease in the value of an asset sue to peril( death)

Answer 3

Loss

Question 4

___ is an immediate , specific event that causes dealth

Answer 4

Peril

Question 5

___ can be reffeed to as the accident itsself

Answer 5

peril

Question 6

__ is the potential for the loss

Answer 6

Risk

Question 7

______presents the chance for loss or gain

Answer 7

speculative risk

Question 8

___ are not insurable

Answer 8

speculative risk

Question 9

Name the elements of insurable risks(7)

Answer 9

chance
mesuarable
predictable
catastophic
must be large
randomly selected

Question 10

___allows for prediction ios individual and group losses based on past experiences and an increased degree of accuracy in predicting losses in large groups

Answer 10

law of large numbers

Question 11

___ is insuring similar objects of insurance that are exposed tosame group of perils(specific event ie hail damage)

Answer 11

Homogeneous exposure units

Question 12

__ is defined as the tendency for poorer risk to seek out insurance

Answer 12

adverse selection

Question 13

__ is the process of analyzing exposure that create risk and design programs to handle tem

Answer 13

risk managemnet

Question 14

__ is to minimize the potential loss

Answer 14

reduction

Question 15

__ is accepting the risk and confronting it if it occurs

Answer 15

retention

Question 16

__ when a large group of people spreads risk to a small certain cost

Answer 16

risk pooling

Question 17

To avoid the risk altogether

Answer 17

avoidance

Question 18

__ to make someone else responsible for a loss

Answer 18

transference

Question 19

The insurer transfers the loss it is a contractual arrangement that transfers exposure from one insurer to another insurer

Answer 19

reinsurance

Question 20

__ is to calculate the value of a persons lif e based on computing the value of future earings

Answer 20

human life value approch

Question 21

__ is based on the money needed for current or future expenses

Answer 21

needs based value approch