Primerica Pre-licensing Course Exam Questions and Answers with Complete Solutions

agent - legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer insured - the person covered by the insurance policy; this person may or may not be the policyowner broker - an insurance agent not appointed by an insurer and is deemed to represent the client insurance policy - a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events insurer - the company who issues an insurance policy policyowner - the person entitled to exercise the rights and privileges in the policy premium - the money paid to the insurance company for the insurance policy reciprocity - a mutual interchange of rights and priveleges risk - the uncertainty or chance of a loss occurring pure risk - situations that can only result in a loss or no change; no opportunity for financial gain speculative risk - involves the opportunity for either loss or gain; not insurable hazard - condition or situation that increases the probability of an insured loss occurring physical hazard - individual characteristic that increases the chance of a cause of loss; exists because of a physical condition, past medical history, or condition at birth (i.e. blindness) moral hazard - tendency towards increased risk; involves evaluating the character and reputation of the proposed insured; these applicants may lie on an application for insurance, or have submitted fraudulent claims in the past morale hazard - similar to moral hazards; arise from a state of mind that causes indifference to loss, such as carelessness; actions taken without forethought may cause physical injuries peril - the cause of the loss insured against in an insurance policy life insurance - insures against the financial loss caused by the premature death of the insured health insurance - insures against the medical expenses and/or loss of income caused by the insured's sickness or accidental injury property insurance - insures against the loss of physical property or the loss of its income-producing abilities casualty insurance - insures against the loss and/or damage of property and resulting liabilities loss - the reduction, decrease, or disappearance of value of the person or property insured in a policy, caused by a named peril; insurance provides a means to transfer loss sharing risk - a method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group; a reciprocal insurance exchange is a risk-sharing arrangement transfer risk - the loss is borne by another party; will not eliminate the risk of death or illness, but relieves the insured of the financial losses these risks bring avoidance of risk - eliminating exposure to a loss retention - also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays; planned assumption of risk by an insured through the use of deductibles, copayments, or self-insurance reduction - includes actions such as installing smoke detectors in our homes, having an annual physical to detect health problems early, or perhaps making a change in our lifestyles due to chance - a loss that is outside the insured's control definite and measurable - a loss that is specific as to the cause, time, place, and amount; an insurer must be able to determine how much the benefit will be and when it becomes payable