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LOMA 281 Module 1 Exam Questions And Correct Answers Graded A+
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LOMA 281 Module 1 Exam Questions And CorrectAnswers Graded A+ 2024-2025
Risk - the likelihood of an asset to differ from its predicted price either higher or lower,
Premium - an amount of money that is set by an insurer, which has to be paid by the
insured in return for their promise to pay a policy benefit in case of a particular loss,
Insurance company - a business organization that offers protection to individuals against
the risk of a certain economic loss arising from particular events.
Life insurance - Answer A type of insurance under which the insurer promises to pay a
death benefit upon the death of a named person.
Annuity - Answer A financial product by which an insurer, in return for receiving a
premium, promises to make periodic payments to a named person or entity.
Applicant - Answer The person or entity that applies for an insurance policy.
Policyowner - The owner of the issued policy.
Insured - The person whose life or health the policy insures.
Beneficiary - The named person to receive the policy benefit if the insured event occurs.
Third party policy - A policy one person buys that insures the life of another person.
Speculative risks - A risk involving three possible outcomes: loss, gain, or no change.
, Pure risk An uninsurable risk that wholly lacks the chance of a gain; either a loss occurs
or no loss occurs.
Contracts of indemnity Health insurance; An insurance policy under which the amount of
the policy benefit payable for a covered loss is based on the actual amount of financial
loss that results from the loss, as determined at the time of the loss.
Valued contract - The amount of the policy benefit payable upon the occurrence of a
covered loss without regard to the actual amount of the loss incurred. An insurance
policy which stipulates the amount of the policy benefit payable in case of a loss without
regard to the actual loss.
Face amount - The amount of the policy benefit as stated on the first page of a life
insurance policy.
Law of large numbers A theory of probability that states that generally the greater the
number of times we observe an occurrence of a particular event, the closer our observed
outcome approximates the 'true' probability that the event will occur.
Reinsurance - Answer Insurance that one insurance company, called the direct writer,
buys from another insurance company, called the reinsurer, in order to transfer some of
the risk on insurance policies that the direct writer has issued.
Limit of retention - The maximum amount of insurance an insurer is willing to carry at its
own risk on any one life. The direct writer cedes anything above that limit to a reinsurer in
a reinsurance transaction or through other risk transfer mechanisms.
Direct writer - AKA ceding company; In a reinsurance transaction, the insurance company
that buys reinsurance.
Reinsurer - Answer A reinsurer is the company which accepts reinsurance from the direct
writer in a reinsurance transaction.
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