Kentucky State Licensing- Insurance fully solved graded A+ 2024

Kentucky State Licensing- InsuranceThe three most important principles of insurance are: - correct answer Risk pooling, The law of large numbers, and Insurable interest. Risk pooling - correct answer spreads risk by sharing the possibility of loss over a large number of people. It transfers risk from an individual to a group. Law of large numbers - correct answer estimate how many losses will occur in a certain group of people over a certain period of time. Actuaries - correct answer people who collect and analyze risk data. Actuaries take statistical data and determine the rate people will die, termed mortality, and the rate people will get sick, termed morbidity. Used with law of large numbers. insurable interest - correct answer an individual must have a valid concern for the continuation of the life or well being of the person insured. Therefore, there must be some type of relationship there, such as: spouse, children, parents, business partner, person in debt to you, etc. Risk - correct answer the possibility or uncertainty of a loss occurring The two types of risk are: - correct answer Speculative and pure Speculative risks - correct answer present a potential for loss or gain and are not covered by insurance policies. ARE NOT COVERED BY INSURANCE, because there is a chance for monetary gain. Ex: gambling, stock market, etc. Pure risks - correct answer present a potential for loss only. Pure risk is the only type of risk that is insurable.