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LOMA 281 Module 1 Lesson 1 - Risk and Insurance Review Questions and Answers $8.99   Add to cart

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LOMA 281 Module 1 Lesson 1 - Risk and Insurance Review Questions and Answers

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Risk The Possibility of an unexpected result; could be a loss or gain Speculative Risk 3 possible outcomes: Loss, gain, or no change ex. buying stock Pure Risk No possibility of a gain ex. people dying after they buy stock Is speculative or pure risk insured? Only pure risk Steve is too nervo...

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  • August 15, 2024
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  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • LOMA 281
  • LOMA 281
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LOMA 281 Module 1 Lesson 1 - Risk and
Insurance Review Questions and
Answers
Risk ✅The Possibility of an unexpected result; could be a loss or gain

Speculative Risk ✅3 possible outcomes: Loss, gain, or no change

ex. buying stock

Pure Risk ✅No possibility of a gain

ex. people dying after they buy stock

Is speculative or pure risk insured? ✅Only pure risk

Steve is too nervous about losing money in the stock market, so he doesnt invest in
stocks. This is an example of ✅Avoiding Risk

Mark uses a laptop computer in his business. If he loses the laptop or accidentally
damages it, Mark will have to purchase another one or pay to replace it. This is an
example of ✅Accepting Risk

To reduce the likelihood of fire destroying her convenience store, Rebecca installed
smoke detectors and a sprinkler system. This is an example of ✅Controlling Risk

Conrad purchased a disability income insurance policy to provide for his family in case
he becomes sick or injured and cant work. This is an example of ✅Transferring Risk

Insurance ✅Method for transferring risk from an individual to an insurance company

Policy Benefit ✅A specific amount of money the insurer agrees to pay under an
insurance policy when a specific loss occurs.

Premium ✅A specific sum of money paid by the insured to the insurance company in
exchange for financial protection against loss.

Life Insurance ✅insurance that pays out a sum of money either on the death of the
insured person or other events such as terminal illness or critical illness can also trigger
payment.

, Life insurance protects against ___ of a deceased person ✅1. Lost Future Income
2. Funeral Expenses
3. Final Medical Expenses
4. Unpaid Debts

Risk Pooling ✅Organizing people into a group to collectively absorb the risk faced by
each individual

Annuity ✅Can be purchased if you outlive your assets. Receiving a promise of periodic
payments for a set period or for life.

Example of annuity ✅Vlad might purchase an annuity that will provide monthly
payments of $1000 to him for 20 years, with the understanding that if he lives another
30 years, he will have to survive 10 years without that source of income. Or he might
purchase an annuity that provides monthly recurring payments of $500 for the rest of his
life, regardless of how long he lives

Micah wants to provide her family with a source of income that they can use if she dies.
This is an example of ✅Life Insurance

Micah wants to make sure that he has a monthly income once he retires. This is an
example of ✅Annuity

Hector applies for an insurance policy for him and his wife. Who is the applicant,
policyowner, insured, beneficiary, and is there a third-party policy? ✅For Hectors life:
Applicant: Hector
Policyowner: Hector
Insured: Hector
Beneficiary: Maria (wife)
Third-party policy: No

For Marias life:
Applicant: Hector
Policyowner: Hector
Insured: Maria
Beneficiary: Hector
Third-party policy: Yes

Is the applicant usually the policyowner? ✅Yes

Applicant ✅The person or entity that applies for an insurance policy

Policyowner ✅The person or entity that owns the insurance policy

Insured ✅The person whose life, health, or property is insured under the policy

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