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LOMA 281 Module 1 questions with 100% correct answers
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LOMA 281 Module 1 questions with 100% correct answers
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LOMA 281 Module 1Risk - correct answer ✔✔the possibility of an unexpected result.
Premium - correct answer ✔✔A specified amount of money an insurer charges in exchange for its
agreement to pay a policy benefit when a specific loss occurs.
Insurance company - correct answer ✔✔A company that provides protection against the risk of financial
loss caused by specific events.
Life insurance - correct answer ✔✔A type of insurance under which the insurer promises to pay a death
benefit upon the death of a named person.
Annuity - correct 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 - correct answer ✔✔The person or entity that applies for an insurance policy.
Policyowner - correct answer ✔✔The person or entity that owns the issued policy.
Insured - correct answer ✔✔The person whose life or health the policy insures.
Beneficiary - correct answer ✔✔The person named to receive the policy benefit if the insured event
occurs.
Third party policy - correct answer ✔✔A policy one person purchases that insures the life of another
person.
Speculative risks - correct answer ✔✔A risk that involves three possible outcomes: loss, gain, or no
change.
, Pure risk - correct answer ✔✔A risk that involves no possibility of gain; either a loss occurs or no loss
occurs.
Contracts of indemnity - correct answer ✔✔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 - correct answer ✔✔Life insurance; An insurance policy that specifies the amount of the
policy benefit that will be payable when a covered loss occurs, regardless of the actual amount of the
loss the was incurred.
Face amount - correct answer ✔✔the amount of the policy benefit listed on the first page of a life
insurance policy.
Law of large numbers - correct answer ✔✔A theory of probability which states that, typically, the more
times we observe a particular event, the more likely it is that our observed results will approximate the
'true' probability that the event will occur.
Reinsurance - correct answer ✔✔Insurance that one insurance company, known as the direct writer,
purchases from another insurance company, known as the reinsurer, to transfer risk on insurance
policies that the direct writer has issued.
Retention limit - correct answer ✔✔The maximum amount of insurance that 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 - correct answer ✔✔AKA ceding company; In a reinsurance transaction, the insurance
company that purchases reinsurance.
Reinsurer - correct answer ✔✔In a reinsurance transaction, the company that provides reinsurance to
the direct writer.
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