PA LIFE INSURANCE.pdf file:///C:/Users/HP/Desktop/NIW/PA%20LIFE%20INSURANCE
PA LIFE INSURANCE EXAM
1. Insurance: created as a practical means to reduce the financial impact of anunexpected
loss.
2. life insurance: transfers to a life insurance company the risk of financial loss re-sulting from
the death of an insured person.The life insurance company guaranteesto pay a specified amount
of money to a beneficiary when the insured dies.
3. annuity: A cash contract between a person (the annuity owner) and a life in- surance
company (the annuity issuer). The annuity is set up to accumulate and/ordistribute a sum of
money.
4. beneficiary: person or persons designated to receive benefits from insurancepolicy or
annuity.
5. health insurance: helps to lessen the financial impact of an insured's illness ordisability by
transferring the risk to a health insurance company.
6. property and casualty insurance: covers damage to a loss of property such as a home or
automobile by compensating the insured for the amount of the loss or byproviding a specific sum
of money according to the the terms of the insurance policy
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7. agents: producers, legally considered representatives of the insure that employsthem,
8. risk: the chance of loss
9. loss: an unwelcome and unplanned reduction in economic value`
10. pure risk: involves only the chance of a loss, and no gain to the person as- suming the risk,
including untimely death or serious illness or disability of a person.(insurable)
11. speculative risk: results in loss or gain. examples include: gambling and invest-ing in the
stock market. (uninsurable)
12. direct loss: immediate result of an event involving an insured peril. example:death of a
family breadwinner
13. indirect loss: more remote, example: loss of a decedents income is an indirectloss resulting
from the direct loss of the insured's life.
14. exposure or loss exposure: state of being subject to a possible loss. example:a coal miner is
generally exposed to a greater risk of death than an accountant, therefore a higher premium
would be charged to insure the coal miner.
15. exposure units: basis for each applicants premium. example: a life insurer willassign more
exposure units to an applicant who is a coal miner than one who is anaccountant.
16. peril: immediate cause of a loss, example: death, disability and accidentalinjuries or
sickness.
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17. hazard: a condition that raises the chance of encountering a peril or increasesthe severity
of a loss.
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