LOMA 280 Chapter 1 Test Questions and Correct Answers
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Course
LOMA 280
Institution
LOMA 280
Speculative Risk Loss, gain, or no change; cannot be insured
Pure risk Can be insured; the risk of loss w/o the possibility of a gain
Risk Management The process of eliminating reducing risk; includes: avoiding, controlling, transferring, or accepting.
Insurer A company that accepts risk and mak...
LOMA 280 Chapter 1 Test Questions and
Correct Answers
Speculative Risk ✅Loss, gain, or no change; cannot be insured
Pure risk ✅Can be insured; the risk of loss w/o the possibility of a gain
Risk Management ✅The process of eliminating reducing risk; includes: avoiding,
controlling, transferring, or accepting.
Insurer ✅A company that accepts risk and makes a promise to pay a policy if loss
occurs.
Policy Benefit ✅Amount of money insurer agrees to pay under policy.
Personal Risk ✅Associated w/ economic loss of death, health, injury, outliving
resources
Property Damage Risk ✅Benefit if insured items are damaged, destroyed, or lost
Liability Insurance ✅Provides benefit payable on behalf of legally responsible party
Beneficiary ✅Person the p/o names to receive policy benefit
By chance; definite; significant; be predictable; non-catastrophic to insurer.
✅Characteristics of insurable risks - the loss must be [5 Things]:
Contract of indemnity ✅Amt. of policy benefit payable for a covered loss is based on
the actual amount of financial loss resulting from a covered event, det. at time of event.
Morbidity Rate ✅Incidence of sickness and accidents, by age in a given table
Reinsurance ✅One company (direct wright) purchases from another insurance
company (reinsurer) to transfer all/part of the risk on insurance policies the direct writer
issued.
Antiselection ✅Individuals who believe they have a greater-than average likelihood of
loss seek insurance protection to a greater extent than other individuals
Underwriting ✅(1) identifying risks that proposed insured presents, and
(2) classifying the degree of risk that a proposed insured represents.**
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