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MN LIFE ACCIDENT & HEALTH PRODUCER EXAM QUESTIONS AND ANSWERS 100% CORRECT
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MN LIFE ACCIDENT & HEALTH PRODUCER EXAM QUESTIONS AND ANSWERS 100% CORRECT
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MN LIFE ACCIDENT &HEALTH PRODUCER
EXAM QUESTIONS AND
ANSWERS 100%
CORRECT
, MN LIFE ACCIDENT & HEALTH PRODUCER EXAM
QUESTIONS AND ANSWERS 100% CORRECT
Speculative Risk - ✔✔✔ - involves the chance of loss or gain, and is not insurable
Pure Risk - ✔✔✔ - involves the chance of loss only, and is insurable
Peril - ✔✔✔ - Something that causes a direct loss
Physical Hazard - ✔✔✔ - Visible (Black ice)
Moral Hazard - ✔✔✔ - dishonest tendencies (Fraud)
Morale Hazard - ✔✔✔ - Carless, Irresponsible (leaving keys in car)
Exposure - ✔✔✔ - susceptibility to loss
Adverse selection - ✔✔✔ - those with high risk situations attempt to purchase insurance before those with
average or below- avg. risk
Insurance - ✔✔✔ - The transfer of risk from one to many
Pooling of Risk - ✔✔✔ - A large reserve of money available to pay claims
Law of Large numbers - ✔✔✔ - the accuracy of the insurance companies loss projections will increase,
need large numbers in order to predict accurate predictions
, Certificate of Insurance - ✔✔✔ - - used after policy is issued
- contains summary of policy coverage & limits
- required in loan transactions and other matters
Deductibles - ✔✔✔ - Straight: the insured pays a certain amount owe loss before the insurer is required to
make a payment
Aggregate: the insured pays for all losses until they exceed a certain amount (apply per policy period)
Corridor: is applied before benefits under major medical plans are paid, happens middle of deductible
Elimination period: used w/ disability income policies & long term care insurance
Methods of Managing risk - ✔✔✔ - Avoidance: avoiding a particular activity that could turn into a loss
Reduction: taking action to reduce the possibility of a loss
Retention: the insured accepts possibility of loss and assumes part of risk, (a deductible is a form of
retention)
Transfer: Shifting financial burden to one another
Sharing: chance of loss is shared among individuals (Pooling)
Indemnity - ✔✔✔ - -restoring the insured to approx. the same position before there was a loss
- actual cash value= replacement-depreciation
- common exceptions
replacement cost: reimburses insured for damaged or destroyed property w/o subtraction depreciation
valued policy: pays face amount of total loss regardless of actual cash value
pro -rata-bility: insurer will pay proportional share of loss
Primary & excess indemnity - ✔✔✔ - primary insurer pays first, then once exhausted, the excess insurer
pays too
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