Test 1

Question 1

When the probabilities of future outcomes cannot be estimated reliably, the outcomes are described as?

Answer 1

Uncertainty

Question 2

If, over time, the chance for a loss occurring is increasing significantly what type of risk is this and what will happen to insurance

Answer 2

Dynamic, and the price of insurance will become less available and more expensive.

Question 3

Applies to a limited number of exposures.

Answer 3

Particular Risk

Question 4

Comprised of Mental Anguish that is not easily measurable and quantifiable.

Answer 4

Subjective Risk

Question 5

Private insurance companies generally won’t be offer insurance when risks are?

Answer 5

Fundamental and Uncertain

Question 6

Insurance Companies prefer risks that are?

Answer 6

Particular, static, objective, and pure.

Question 7

The last action of events that causes a loss?

Answer 7

Peril

Question 8

Hazards are defined as?

Answer 8

Adverbs and Adjectives

Question 9

A Hazard in which a person intentionally wishes to purposely cause a loss because of dishonesty or some other character defect.

Answer 9

Moral Hazard

Question 10

Moral Hazard Examples

Answer 10

Arson, Padding Insurance Claims, Faking Whiplash etc.

Question 11

What happened in the 1950s to change risk managers from insurance buyers to actual risk managers?

Answer 11

An expanding array of statistical and quantitative tools available for making better decisions about risk were developed.

Question 12

What are the four basic risk management techniques?

Answer 12

Avoidance, Loss Control (Prevention, Reduction), Retention, Transfer.

Question 13

Generally, if risks are to be totally retained,

Answer 13

Losses must not be catastrophic and no other methods of risk management are available.

Question 14

Loss control actives occur

Answer 14

Before, After, and During a Peril.

Question 15

Insurance is a subset of?

Answer 15

Transfer

Question 16

Insurance is most widely used when?

Answer 16

Frequency is Low and Severity is high.

Question 17

A Private violation of another’s rights?

Answer 17

Tort

Question 18

People who have a legitimate purpose on someone else’s property but are not specifically invited are called

Answer 18

Licensees

Question 19

If both parties are negligent and neither can collect this is an example of

Answer 19

Contributory Negligence

Question 20

A person who signs a hold harmless agreement prior to bungee jumping provides the bungee operator with which defense if the jumper is injured?

Answer 20

Assumption of Risk

Question 21

Through a contract, it’s possible to assume the negligence of another. What is the name for this assumed liability?

Answer 21

Vicarious Liability

Question 22

Jewelry, CD’s, Animals, Machinery and Inventory are all examples of

Answer 22

Personal Property

Question 23

Which of the following definitions of pre-mature death is most widely used by financial planners?

Answer 23

Death that leaves unfulfilled business and family obligations?

Question 24

1/2 of the deaths in the united states are attributed to?

Answer 24

Heart Disease/Cancer

Question 25

What accidental death is least frequent in the United States?

Answer 25

Air/Space Transport

Question 26

Since 2000, the annual increase in overall life expectancy in the US has averaged about ______ weeks.

Answer 26

5-10

Question 27

Average time of Unemployment is roughly?

Answer 27

12-20 Weeks

Question 28

Insurers are able to successfully manage these risks because they

Answer 28

Pool the risks together and apply the law of large Numbers?

Question 29

Homeowners’ insurance policies don’t cover losses from floods because insurance companies

Answer 29

Try and avoid catastrophic losses.

Question 30

Principle which requires a high degree of honesty from both parties?

Answer 30

Utmost Good Faith Principle

Question 31

What is the defining characteristic of an Aleatory Contract?

Answer 31

Exchange of consideration can be greatly unequal.

Question 32

What are the four unique characteristics of Insurance Contracts?

Answer 32

Aleatory, Conditional, Adhesion, Unilateral.