Fundamentals of Insurance Tests Compilation Bundle

What is the definition of "risk"? - the possibility of loss. Types of hazards? - Physical, attitudinal (carelessness), and moral. How do insurance companies measure probabilities? - By observing large numbers (mass) of similar (homogeneous) exposures in the statistical group from which they make.....

What is the major function of insurance? - to allow the spread of risk What are the five important functions of insurance? - 1) insurance is the shifting of financial responsibility for a loss 2) payment will be made only in the event of an insured risk 3) the amount of payment is restricted to...

The major function of insurance is to achieve a spread of risk. Explain what is meant by spread of risk. - the major function of insurance is to share the losses of the few among the many What are the five functions of insurance? - 1. spread of risk (major function) 2. basis of credit system 3. elim...

Insurance plays an important role in managing financial risk. The main purpose of Insurance is to: A. Enable the consumer to obtain loan or mortgage. B. Provide employment and investment capital. C. Allow spread of risk. D. Reduce losses through loss prevention and loss reduction. - C. Allow spread ...

1. To "Bind a Risk" means: a. Having authority from the Insurer to put insuranc...b. Finding a company willing to give a quote on a risk c. Getting underwriting information from a client d. Automatically renewing an existing policy - a. Having authority from the Insurer to put insurance in for...

The major function of insurance is: a. To reduce the cost of the losses b. To share the losses of the few among the many c. The safeguard the interest of mortgages d. To serve as a basis of existing credit system - b. To share the losses of the few among the many A peril if best defined as: a. The c...

RISK Correct Answer: IS THE CHANCE OF FINANCIAL LOSS PERIL Correct Answer: IS THE CAISE OF FINANCIAL LOSS FOR EXAMPLE- FIRE WATER AND EARTHQUAKE WHAT IS THE MAIN PURPOSE OF INSURANCE Correct Answer: IS TO ALLOW THE SPREAD OF RISK INDEMNITY Correct Answer: MEANS RESTORING THE INSUREDS TO...

What is the role of the federal Government when insurers receive federal licensing? Correct Answer: Licensing provided only to companies that can meet strict financial standards. Established by the office of the Superintendent of Financial Institutions (OSFI). Insurers are monitored on an ongoing b...

What are the legal requirements of an insurance contract? Correct Answer: Offer and Acceptance Legal Competency of both parties Consideration is given Lawful Purpose What are the elements of an insurable risk? Correct Answer: Large number of homogenous exposures Losses must be accidental L...

The coverage limits on Homeowners Insurance Policies are determined after calculating the Replacement Cost of the dwelling building. Once this value is determined, the rest of the coverage limits are calculated. Which of the following coverage limits is correct? a) Personal Property- 100% of Covera...

A building valued at $120,000 is insured for $30,000 and there is an 80% co-insurance clause on the policy. The building was totally destroyed by fire last weekend. The insured would receive a settlement of: a. 7,000 b. 12,000 c. 30,000 d. 37,5000 Correct Answer: c. 30,000 The reinstatemen...

A loss exposure is defined as: (A) a loss that might occur (B) an undesirable end result of a risk (C) the largest possible loss (D) the probability of a loss The answer is (A) by definition Which of the following statements concerning the beneficiary provisions in a life insurance polic...

Insurance industry is over 700 years old. True First type of Insurance: Marine Insurance Lloyd's of London is an insurance company. False Why was it important to the colonists of the new world to transfer the risks associated with the trade industry? Because they stood to l...

List the 5 functions of insurance: 1) Spread of risk 2) Basis of credit system 3) Eliminate worry and develop entrepreneurship 4) Loss reduction and prevention (road safety, alarms, etc.) 5) Employment opportunity Definition of insurance (3 parts) 1) insurance provides a means of shifti...