Principles of Life and Health insurance

Question 1

What is the role of insurance?

Answer 1

Peace of mind, freedom from worrying about death or outliving your income. Insurance provides a safety net like if you die or uncertain economic events.

Question 2

What is life insurance?

Answer 2

Guarantees a sum of money upon the death of the insured.

Question 3

What is health insurance?

Answer 3

Provides funds for medical services and covers loss of income during a disability

Question 4

What is Annuities?

Answer 4

It provides a steady source for a specific period of time during an annuitants lifetime.

Question 5

What is a policy?

Answer 5

A legally binding contract

Question 6

What is Risk Pooling?

Answer 6

everyone puts a little bit of their money together. This way, if one person has a problem, the group can help out. It’s like sharing the load so that everyone has a better chance of staying safe and happy.

Question 7

What is Law of Larger numbers?

Answer 7

The law of large numbers is like saying that when you do something many, many times, the results will start to even out and be more predictable.

Question 8

What is Speculative Risk?

Answer 8

Chance of gaining or losing money (like investing or gambling)

Question 9

What is Pure Risk aka Absolute Risk?

Answer 9

Pure Risk is only insurable because their is never a possibility of gain or profit. EX death illness or permanent disability.

Question 10

What are Perils?

Answer 10

Peril is something that can potentially cause trouble or damage.

Question 11

What are Hazards?

Answer 11

Hazards are things that can make a peril more likely to happen or more serious. They’re like risks or dangers that can lead to trouble.

Question 12

What is a physical Hazard?

Answer 12

Things like broken glass, or sharp knives.

Question 13

What are moral hazards?

Answer 13

Moral hazards are risks that come from people’s behavior or choices like smoking or drinking

Question 14

What is risk avoidance?

Answer 14

simply put, you cant get killed in a plane crash if you never get on a plane.

Question 15

What is risk reduction?

Answer 15

seat belts, fire extinguishers, smoke alarms guns etc.

Question 16

What is risk retention?

Answer 16

basically you’re assuming the risk and not getting insurance so therefore it would be your responsibility to cover whatever it is that should of been covered. ex, a phone without insurance means you’ll buy your own phone.

Question 17

What is Risk Transfer?

Answer 17

transferred the risk of financial loss from an insurable incident to the insurance company.

Question 18

There are 6 elements to insurable risk, what are they?

Answer 18

1.Loss must be due to chance
2.Loss must be definite and insurable
3.Loss must be predictable
4.Loss cannot be catastrophic
5.Loss exposures to be insured must be large
6.Loss exposure to be insured must be randomly selected

Question 19

Hazards are divided into how many types?

Answer 19

3 types Physical, Moral and Morale

Question 20

What is a Morale Hazard?

Answer 20

’s like being less responsible because you’re not the one who has to face the consequences.