General Section: Cram Course # 1 Flashcards Preview

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Flashcards in General Section: Cram Course # 1 Deck (74)
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1

In health insurance, the rate at which accident, sickness or disability will occur.

Morbidity

2

The rate at which people die.

Mortality

3

The unintentional decrease in value of an asset due to a peril.

Loss

4

Spreading a risk over a large group of people, by substituting a small cost for a large unknown risk (economic risk of dying).

Risk Pooling or Loss Sharing

5

What do we call the predicting of the approximate number of deaths or the likelihood of disability that will occur among a certain group during a certain period?

Law of large numbers

6

The item insured in the policy.

Exposure unit

7

The uncertainty regarding financial loss.

Risk

8

What type of risk involves both the chance of loss or gain? (Ex. Gambling)

Speculative Risk- NOT Insurable

9

What type of risk has only the chance of loss? (Ex. injury, illness, and death)

Pure Risk- Insurable

10

The condition of being prone to loss due to a hazard or uncertain event.

Exposure

11

Three basic types of Hazards
1) _________- blind, family traits
2) _________- stealing, smoking, habits that increase the probability of loss
3) _________- jay walking, careless, the attitude, state of mind (It's insured so why worry, whatever)

Physical
Moral
Morale

12

Six elements of Insurable Risk that make Pure Risks Insurable:
1) LOSS must be due to ___________
2) LOSS must be definite and __________
3) LOSS exposure to be insured must be __________
4) LOSS exposure must be __________ __________
5) LOSS must be ___________
6) LOSS cannot be __________

1) Chance
2) Measurable
3) Large
4) Randomly Selected
5) Predictable
6) Catastrophic

13

The immediate specific event that causes a loss.

Peril

14

What gives rise to a peril?

A Hazard

15

What kind of hazard is it when an employee takes merchandise without paying for it?

Moral

16

What kind of hazard is it when you are late for an appointment?

Morale

17

The application of laws, regulations, and legal court rulings which increase the chance or amount of loss.

Legal Hazard

18

The total amount the insurer will pay for an insured risk.

Limit of liability

19

Five options to handle risk (ARRTS)
1) A- _________ (don't fly)
2) R- _________ (smoke alarm)
3) R- _________ (self insured)
4) T- _________ (buys insurance)
5) S- _________ (Copayment/Coinsurance)

1) Avoidance
2) Reduction
3) Retention
4) Transference
5) Sharing

20

What is a company called that helps an insurance company transfer a portion of its risk?

Reinsurer

21

What type of company has the purpose to make a profit for the stockholder?

* Structured the same as any corporation
* Pays NO dividends to policyholders

Stock Company

22

What type of company is owned by its Policy holders?

* Issues participating and non participating policies
* Pays its policyholders dividends

Mutual Company

23

A refund of Over Payment (partial over payment being returned to policy owner)

Dividends

24

____________ is also known as Debit Insurer/Industrial Insurance (small face amounts, cash accepted as premiums, more expensive)

Home Service Insurance

25

Insurance which offers coverage to people through the individual market.

Private Insurers

26

The entity that assumes the insured's risk. Synonymous with insurance company.

Insurer

27

The person who is covered under the insurance policy.

Insured

28

The person who has all the ownership rights under the policy, pays premiums, and accepts the policy when delivered.

Policy Holder or Policy Owner

29

A Company doing business in the state in which it is incorporated.

Domestic Insurer

30

A Company licensed to do business in a state in which it is not incorporated.

Foreign Insurer