Insurance Flashcards
1
Q
Risk Transfer
A
- Insurance
- Hold harmless agreements/hedging contracts
- Incorporation of your business
2
Q
Risk Retention (risk financing)
A
- Deductibles in insurance policies
- Coinsurance in insurance policies
- Self-Insurance
3
Q
Risk Reduction (risk control)
A
- Install sprinkler system, smoke detectors, burglar alarm for home
- Create safety programs for business
4
Q
Risk Diversification (risk control)
A
-Store assets at different locations
5
Q
Risk Avoidance (risk control)
A
- Instead of purchasing property, you rent
- Avoid buying a house with a swimming pool
6
Q
Risk Transfer
A
- High Loss / Severity
- Low Loss / Frequency
7
Q
Risk Avoidance
A
- High Loss Severity
- High Loss Frequency
8
Q
Risk Retention & Reduction
A
- Low Loss Severity
- High Loss Frequency
9
Q
Risk Retention
A
- Low Loss Severity
- Low Loss Frequency
10
Q
Indemnity
A
Make Whole
11
Q
Basic Rules of Risk Management
A
- Coverage for potential catastrophes should be purchased first (life, disability, health, homeowners, and auto.)
- Severity is more important than probability
- High probability will mean high premiums or a decline of coverage by the carrier
12
Q
Rescission
A
Contract is deemed null from its beginning due to fraud, misrepresentation, concealment or mutual mistake
13
Q
Parts of Insurance Contract - DDICE
A
- Declarations Page
- Definititions
- Insurance Agreements
- Conditions
- Exclusions
14
Q
Carve-Out Plans
A
- Split Owner
- IRS Section 162 bonus plan
- DBO (Death Benefit Only)
