FIN 470 Exam 3 Questions and Answers
Premium - Ans:-A specific sum of money paid by the insured to the insurance company in exchange
for financial protection against loss.
7 basic principles all insurance companies are subject to - Ans:-1.There must be a relationship
between the insured and the...
How insurance companies deal with adverse selection - Ans:✔✔--Health insurance polices require
physical exam
-Preexisting conditions may be excluded from policy
How insurance companies deal with moral hazard - Ans:✔✔-deductibles
Independent agents - Ans:✔✔-Agents that sell the insurance products of several companies and work for
themselves or other agents.
Exclusive agents - Ans:✔✔-Agents that work for only one insurance company
Underwriter (insurance) - Ans:✔✔-reviews each policy prior to its acceptance to determine if the risk is
acceptable
Term Life Insurance - Ans:✔✔-Insurance that provides financial protection from losses resulting from a
death during a definite period, or term. (10-30 years)
whole life insurance - Ans:✔✔-Similar to term life, but allows the policyholder to borrow against the
policies cash value. When the term of policy expires, the insured can get the cash value of the policy
universal life insurance - Ans:✔✔-includes both a term life portion and a savings portion
annuities - Ans:✔✔-pays a benefit to the insured until death, to cover retirement years (instead of a
lump sum of cash, monthly payments)
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