2 To 15 Insurance License Florida With Brilliant Questions And Answers
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2 To 15 Insurance License Florida With Brilliant
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2 To 15 Insurance License Florida With Brilliant
Speculative Risk - CORRECT ANSWER-Risk that involves chance of both loss and
gain; not insurable
Pure Risk - CORRECT ANSWER-Risk that involves the chance of loss only, there is no
opportunity for gain; insurable
Law of Large Numbers - CORRECT ANSWER-Basic principle of insurance that the
lar...
2 To 15 Insurance License Florida With
Brilliant Questions And Answers
Speculative Risk - CORRECT ANSWER-Risk that involves chance of both loss and
gain; not insurable
Pure Risk - CORRECT ANSWER-Risk that involves the chance of loss only, there is no
opportunity for gain; insurable
Law of Large Numbers - CORRECT ANSWER-Basic principle of insurance that the
larger the number of individual risks combined into a group, the more certainty there is
in predicting the amount of loss that will be incurred in any given period.
Elements of Insurable Risk - CORRECT ANSWER-Loss must be: due to chance,
definite and measurable, predictable, cannot be catastrophic, loss exposures to be
insured must be large, loss exposures to be insured must be randomly selected.
Hazard - CORRECT ANSWER-Any factor that gives rise to a peril.
Peril - CORRECT ANSWER-Specific event causing loss and giving rise to risk. (Fire is a
peril to a burning building)
Risk Pooling - CORRECT ANSWER-Basic principle of insurance whereby a large
number contribute to cover the losses of a few. The risk is transferred from an individual
to a group.
Physical Hazard - CORRECT ANSWER-Individual characteristics that increase the
chance of peril. (Blindness or deafness)
Moral Hazard - CORRECT ANSWER-Tendencies that people may have that increase
risk and the chance of loss. (Alcohol and drugs)
Morale Hazard - CORRECT ANSWER-Individual tendencies that arise from an attitude
or state of mind causing indifference to loss. (Driving reckless with no fear of death)
Risk Avoidance - CORRECT ANSWER-Avoiding as many risks as possible. (Never
flying, never driving, never investing)
Risk Reduction - CORRECT ANSWER-Taking actions to reduce risk. (Installing a
smoke alarm)
,Risk Retention - CORRECT ANSWER-Accepting the risk and confronting it if and when
it occurs. (Self-insurance)
Risk Transfer - CORRECT ANSWER-The practice of passing on the risk in question to
another entity, such as an insurance company.
Adverse Selection - CORRECT ANSWER-less favorable insurance risks (people in poor
health) to seek or continue insurance to a greater extent than other risks. Tendency of
policymakers to take advantage of favorable options in insurance contracts.
Multi-line insurers - CORRECT ANSWER-Companies that write more that one line of
insurance
Stock Insurance Company - CORRECT ANSWER-A private insurance company owned
and controlled by a group of stockholders whose investment in the company provides
the safety margin necessary in issuance of guaranteed, fixed premium, nonparticipation
policies. Purpose is making profit for stockholders.
mutual insurance company - CORRECT ANSWER-Insurance company characterized
by having no capital stock; it is owned by it's policyowners and usually issues
participating insurance.
Participating companies because policyowners participate in policy dividends.
Mutualization - CORRECT ANSWER-Stock company converts to a mutual company
Demutualizing - CORRECT ANSWER-Mutual company convert to stock company
Commercial Insurers - CORRECT ANSWER-Stock and mutual companies; they both
write life, health, property, and casualty insurance.
Assessment Mutual Company - CORRECT ANSWER-An insurance company
characterized by member-insureds who are assessed an individual portion of each loss
that occurs. No premium payment is payable in advance.
Not permitted in Florida
Advance premium assessment mutual - CORRECT ANSWER-Charges a premium in
advance, at the beginning of the policy period.
Not permitted in Florida
Reciprocal Insurance Company - CORRECT ANSWER-Insurance company
characterized by the fact it's policyholders insure the risks of other policyholders.
Lloyd's of London - CORRECT ANSWER-An association of individuals and companies
that underwrite insurance on their own accounts and provide specialized coverages.
Not an insurer
,Reinsurers - CORRECT ANSWER-Specialized branch of the insurance industry
because they insure insurers.
Reinsurance - CORRECT ANSWER-Arrangement by which an insurance company
transfers a portion of a risk it has assumed to another insurer.
Limit the loss any one insurer would face should a very large claim become payable.
ceding company - CORRECT ANSWER-Insurance Company transferring risk
Risk Retentio Group (RRG) - CORRECT ANSWER-Mutual insurance company formed
to insure people in the same business, occupation, or profession (pharmacy, dentist,
engineers)
Fraternal benefit society - CORRECT ANSWER-Non-profit benevolent organization that
provides insurance to its members. Based on religious, national, or ethnic lines
Home service or Debt Insurance - CORRECT ANSWER-Industrial insurance
Insurance in small amounts (usually $1,000 to $2,000) with premiums collected weekly
by the selling agent
Reinsurer - CORRECT ANSWER-An insurance company assuming the risk
Service providers - CORRECT ANSWER-Organization that provides health coverage by
contracting with service providers to provide medical services to subscribers who pay in
advance through premiums.
HMOs PPOs
Participating Life Insurance - CORRECT ANSWER-Policy which pays a dividend to its
owner based on financial success of the insurance company
When a stock life insurance company issues both participating and nonparticipating
policies, the company is doing business as a ________________? - CORRECT
ANSWER-MIXED PLAN
nonparticipating policy - CORRECT ANSWER-life insurance that does not provide
policy dividends; also called a nonpar policy
Mutual Life Insurance Companies - CORRECT ANSWER-owned by policyholders
mutual insurers - CORRECT ANSWER-Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
, Demutualization - CORRECT ANSWER-a mutual insurer is converted into a stock
insurer
Domiciliary State - CORRECT ANSWER-The state in which the decedent's domicile
(legal home) is located.
Stock and Mutual companies can both write ... - CORRECT ANSWER-Life, health,
property and casualty insurance policies
Reciprocal Insurers - CORRECT ANSWER-are unincorporated groups of individual
members that provide insurance for other members through indemnity contracts. Each
member acts as both insurer and insured and are managed by Attorney in Fact.
Assessment insurance - CORRECT ANSWER-Prohibited in Florida
Lloyd's of London - CORRECT ANSWER-An association of individuals and companies
that underwrite insurance on their own accounts and provide specialized coverages.
Reinsurers - CORRECT ANSWER-Companies which sell insurance to insurers to
reduce the insurer's exposure to loss.
ceding company - CORRECT ANSWER-The company transferring the risk
Risk Retention Group (RRG) - CORRECT ANSWER-a mutual insurance company
formed to insure people in the same business, occupation, or profession
Fraternal Benefit Societies - CORRECT ANSWER-Life or health insurance companies
formed to provide insurance for members of an affiliated lodge, religious organization, or
fraternal organization with a representative form of government., nonprofit
Home Service Insurers - CORRECT ANSWER-home service insurance is industrial
insurance sold by home service or debit
life insurance companies. Face amounts are small; usually $1,000 to $2,000 and
premiums are paid weekly.
Service insurers - CORRECT ANSWER-Companies that offer prepayment plans for
medical or hospital services, such as health maintenance organizations.
HMO (Health Maintenance Organization) - CORRECT ANSWER-Health insurance that
requires a PCP and wants you to use only in-network doctors
PPO (Preferred Provider Organization) - CORRECT ANSWER-A type of health plan
that contracts with medical providers, such as hospitals and doctors, to create a network
of participating providers. You pay less if you use providers that belong to the plan's
network. You are not required to have a PCP
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