PA Life, Accident, & Health Insurance Exam Questions and Answers Already Passed

PA Life, Accident, & Health Insurance Exam Questions and Answers Already Passed Insurance defined as the transfer of PURE risk to the insurance company in consideration for a premium. The chance of loss without any chance of gain is called pure risk Speculative risk has the possibility for gain or loss and is not insurable. Risk is defined as the chance of loss. A condition that could result in a loss is known as an exposure A hazard is something that increases the chance of loss. The presence of a physical hazard increases the chance of a loss occurring. A peril is defined as a cause of loss, such as fire. To be insurable, losses must be calculable. The law of large numbers allows insurers to predict claims more accurately. The law of large numbers applies to groups of people, not to individuals. The more people in the group, the more accurate the predictions are. Most insurers buy reinsurance to protect themselves in the event of a catastrophic loss. Insurance laws are not required to be uniform from one state to another. A stock insurer may pay dividends to its shareholders (stockholders), but they may not be guaranteed. A reciprocal insurance company is managed by an attorney-in-fact. An unincorporated association of individuals who insure each other is known as a reciprocal insurer. The government offers insurance primarily based upon social needs, such as flood insurance and workers compensation, but does not offer insurance for the purpose of preventing fraud. A foreign company has their home office in another state. An insurer incorporated outside of the U.S. who sells in the U.S. is an alien company. A producer may be personally liable when violating the producer's contract. Producers represent the insurance company, not the insured. Independent producers own their own accounts and are not insurance company employees. Producers have express, implied and apparent authority.