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Florida Insurance 2-14 Exam Terms questions and answers
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Florida Insurance 2-14 Exam Terms questions and answers
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Florida Insurance 2-14 Exam Termsquestions and answers
Insurance - Financial protection against loss or harm - An arrangement by which
company gives customers financial protection against loss or harm such as theft or
illness in return for premium payments.
Life Insurance - Is based on actuarial or mathematical principles and guarantees a
specified sum of money upon the death of the person who is insured.
Annuities - Provide a stream of income by making a series of payments to the
annuitant for the annuitant's lifetime or for a specifically designated period of
time.
Risk - Uncertainty regarding loss; the probability of loss occurring for an insured or
prospect
Speculative Risks - Involve the possibility of loss and gain. (Not Insurable)
Pure Risks - Involve the possibility of loss only. (Insurable)
Peril - Cause of risk (when a building burns, fire is the peril)
,Florida Insurance 2-14 Exam Terms
questions and answers
Hazards - The source of danger
Physical Hazard - A hazard being of physical nature.
A person being treated of cancer, the disease is the physical endangerment.
(Blindness & deafness)
Risk Avoidance - Occurs when individuals evade risk entirely. "If you don't drive,
then you avoid getting in an auto accident."
Risk Reduction - Takes place when the chances of loss are lessened. Changing a
lifestyle to minimize a known risk.
Risk Retention - Being aware of the risks involved and taking precautions for
financial protection. Auto policy's deductible is an illustration of risk retention
Risk Transference - The act of shifting the responsibility of risk to another in the
form of an insurance contract.
,Florida Insurance 2-14 Exam Terms
questions and answers
Adverse Selection - Refers to the tendency for those individuals who present less
favorable insurance risk to seek or continue insurance to a great extent than other
risks.
Insuring Pure Risk - Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Mutual Insurers - Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Insurers - Prohibited in Florida
, Florida Insurance 2-14 Exam Terms
questions and answers
Pure Assessment Mutual Company - Don't pay premium and total loss is divided
among members
Lloyds of London - NOT considered an insurance company
- An association of individuals and companies that individually underwriter
insurance.
Fraternal Benefit Societies - Must be nonprofit, have a lodge system, and offer
insurance to its members only
Home Service Insurer - Insurer that offers relatively small policies with premiums
payable on a weekly basis.
Captive Agents - A.k.a. Career agents
Works for only one insurer and sells only that insurers products
Independent Agents - Is self-governing and actually works for himself. This affords
him the versatility to represent several insurers and their different insurance
products.
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