Chapter 1

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The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as ...

Utmost Good Faith

Peril

causes of loss (non hazard)

Limit of Liability

face value/amount or death benefit of an individual life insurance policy

Examples of risk retention

self insurance, deductibles, copayments

Elements of insurable risk

the loss must be: due to chance, definite & measurable, statistically predictable, not catastrophic, with large loss exposure, insurance cannot be mandatory

Risk

The uncertainty or change of loss occurring

Which method of dealing with risk is applied when a person purchases insurance?

Transfer

insurance

The Transfer of risk of loss

Risk in insurance terminology refers to

The Uncertainty of financial loss

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's salary and years until retirement ?

The human life value approach

When must insurable interest exist?

At the time of application

Who is eligible for coverage under key person insurance?

The manager of a small store, the pharmacist in a drug store, the executive officer of a company

Conditions that increase the chances of an insured loss occurring are referred to as

Hazards

Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

Indemnity

Insureds Cannot recover more than their financial loss

What is the Needs approach to determine amounts of life insurance based upon?

It's based upon Predicted needs of a family after premature death of the insured.

Types of Hazards

Physical, Moral, Morale

The purpose of key person insurance

So business can lessen the risk of financial loss because of premature death

Common personal uses of life insurance

Survivor protection, estate creation and conservation, cash accumulation and liquidity


Conjuntos de estudio relacionados

WGU Course C836 - Fundamentals of Information Security Quizlet by Brian MacFarlane

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