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WEBCE Questions and Answers 2024 (A+ Solutions) (1)
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- A+Phil 347 Solutions 2024
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- A+Phil 347 Solutions 2024
WEBCE Questions and Answers 2024 (A+ Solutions) (1)
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WEBCE Questions and Answers 2024 (A+Solutions)
Risk - ANS-chance of loss
Loss - ANS-an unplanned reduction in economic value
What risk is insurable? - ANS-pure risk
What are the two types of risk? - ANS-pure risk and speculative risk
Involves the possibility of a loss? - ANS-pure risk
Can result in either loss or gain? - ANS-speculative risk
Loss - ANS-an unplanned reduction in economic value
Direct loss - ANS-immediate result of an event involving an insured peril
Indirect loss - ANS-a loss that results from a direct loss
Loss exposure - ANS-being subject to possible loss
Underwriting Process - ANS-the process that determines if the risk proposed for
insurance should be accepted or rejected
Peril - ANS-the direct cause of a loss and the event that insurance protects against
Life & health insurance covered perils include: - ANS-death, disability, & sickness
Hazard - ANS-a condition that increases the chance of loss due to a peril or increases
the severity of a loss
3 categories of hazards - ANS-moral hazards, morale hazards, & physical hazards
, Moral Hazards - ANS-these are character weaknesses, habits, and risky activities that
increase the possibility of loss
Morale Hazards - ANS-these are a state of mind or attitudes that create an indifference
to loss
Physical Hazards - ANS-these are physical conditions that increase the chance of loss
Risk Management - ANS-the natural process we all go through to contend with the
hazards and perils we face daily
Common risk management techniques: - ANS-avoid the risk, reduce the risk, retain the
risk, share the risk with others, & transfer the risk to someone else
Risk Avoidance - ANS-one of the ways we manage risks
Risk Retention - ANS-choosing to use existing assets to pay for any losses if the risk
becomes a reality; also known as the "do nothing" option
Deductibles - ANS-a stated sun of money that the insured must pay before any major
medical policy benefits are paid
Risk Sharing - ANS-one of the oldest ways to manage risks; similar to buying insurance
in that a part of the risk is transferred to others
Risk Transfer - ANS-and individual or business transfers the risk of loss to an insurance
company in return for a premium
The risk management technique of what is the basis for most insurance today? -
ANS-risk transfer
Insurable Risk - ANS-an applicant is an insurable risk to the insurer if he or she meets
certain criteria for insurability; if these criteria are met, then the applicant is insurable.
To be insurable, a risk must conform to certain standards: - ANS-definable, measurable,
insured's control, large group of similar risks, financially catastrophic, & exclusions
Underwriters - ANS-determine if the proposed risk should be accepted or rejected
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