Chapter 2 Vocab (Notes) Flashcards Preview

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Flashcards in Chapter 2 Vocab (Notes) Deck (16):
1

Insurance

The pooling of fortuitous losses by transfer or such risks to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on their occurrence, or to render services connected with the risk

2

Pooling

involves spreading losses incurred by the few over the entire group

3

Law of Large Numbers

states that the greater number of exposures, the more closely actual results will approach the probable results that are expected from an infinite number of exposures

4

Fortuitous Loss

a loss that is unforeseen, unexpected, and occurs as a result of chance

5

Reinsurance

An arrangement by which the primary insurer that initially writes the insurance transfers to another insurer part or all of the potential losses associated with such insurance

6

Adverse Selection

the tendency of persons with a higher than average chance of loss to seek insurance at standard rates

7

Underwriting

selection and classification of applicants for insurance

8

Life Insurance

pays death benefits to beneficiaries when the insured dies

9

Health Insurance

covers medical expenses because of sickness or injury

10

Disability Plans

pay income benefits

11

Property Insurance

indemnifies property owners against the loss or damage of real or personal property

12

Liability Insurance

covers the insured's legal liability arising out of property damage or bodily injury to others

13

Casualty Insurance

refers to insurance that covers whatever is not covered by fire, marine, and life insurance

14

Personal lines

coverages that insure the real estate and personal property of individuals and families r provide protection against legal liability

15

Commercial Lines

coverages for business firms, nonprofit organizations, and gov't agencies

16

Expense Loading

amount needed to pay all expenses, including commissions, general administrative expenses, state premium taxes, acquisition expenses, and an allowance for contingencies and profit