XCEL Chapter 2

An example of risk sharing would be? A. Adding more security to a high-risk building B. Choosing not to invest in the stock market C. Doctors pooling their money to cover malpractice exposures D. Buying an insurance policy to cover potential liabilities

Doctors pooling their money to cover malpractice exposures

Which of the following is considered to be an event or condition that increases the probability of an insured's loss? A. Risk B. Hazard C. Indemnity D. Peril

Hazard

How do insurers predict the increase of individual risks? A. Law of large numbers B. U.S. Census C. Average mortality incidents D. Experience of morbidity

Law of large numbers

Insurance companies determine risk exposure by which of the following? A. Insurable interest B. Insurance exchanges C. Law of large numbers and risk pooling D. Population table data

Law of large numbers and risk pooling

All of the following are examples of pure risk EXCEPT? A. Losing money at a casino B. Injured while playing football C. Falling at a casino and breaking a hip D. Jewelry stolen during a home robbery

Losing money at a casino

The cause of a loss is referred to as a(n) A. hazard B. adversity C. peril D. risk

Peril

What is known as the immediate specific event causing loss and giving rise to risk? A. Peril B. Hazard C. Loss factor D. Liability

Peril

Which of these techniques will remove the risk of losing money in the stock market by never purchasing stocks? A. Risk reduction B. Risk transference C. Risk avoidance D. Risk retention

Risk avoidance

People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called? A. risk retention B. preexisting conditions C. law of large numbers D. adverse selection

adverse selection

Insurance represents the process of risk? A. selection B. avoidance C. transference D. assumption

transference