• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

Card Range To Study

through

image

Play button

image

Play button

image

Progress

1/52

Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

52 Cards in this Set

  • Front
  • Back
Risk
The chance of loss, possibility of loss, uncertainty, or a variation of actual from expected results.
Pure Risk
A risk in which the results are either a loss or no loss.
Speculative Risk
A risk where a potential for profit as well as loss or no loss exists.
Dynamic Risk
A risk that results from changes in society or the economy (e.g., inflation)
Static Risk
A risk dependent on factors other than a change in society or the economy (e.g., natural disaster)
Objective Risk
The relative variation of an actual loss to an expected loss.
Particular Risk
Personal risk that involves a possible loss for an individual or a small group.
Fundamental Risk
An impersonal risk that involves a possible loss for a large group.
Actuary
An expert in the fields of mathematics, statistics, and probability theory; responsible for predicting losses for various risk pools, calculating required reserves, and producing policy premium rates.
Law of Large Numbers
The chance that predicted results will reflect true results increases as the number of exposures increases
Risk Avoidance
The avoidance of any chance of loss.
Risk Reduction
Taking measures that reduce the frequency or severity of losses.
Risk Assumption
Bearing all or part of the financial burden in the event of a loss.
Active Risk Retention
One is fully aware of the chance for loss and consciously plans to retain all or part of the risk.
Passive Risk Retention
Being unaware of a risk, but taking no steps to manage it properly.
Risk Transfer
Shifting the probability of loss to another party, such as an insurance company.
Contractual Agreements
Often include guarantees at the time of sale; often known as warranties.
Hedging
A means of trying to match profit on one transaction to the expected loss of another.
Incorporation
Results in limited liability for business owners.
Insurance
A mechanism through which risk is transferred to an insurer, evidenced by a promise to pay, in exchange for an equitable premium.
Peril
The proximate, or actual, cause of a loss
Hazard
A condition that creates or increases the likelihood of a loss occurring.
Moral Hazard
A character flaw or level of dishonesty that causes of increases the chance for loss.
Morale Hazard
Indifference to a loss based on the existence of insurance.
Adverse Selection
The increased tendency of high-than-average risks purchasing or renewing insurance policies.
Principle of Indemnity
A person is entitled to compensation only to the extent that financial loss has been suffered.
Subrogation Clause
States that the insured cannot indemnify one-self from both the insurance company and a negligent third party of the same claim.
Principle of Insurable Interest
To have an insurable interest, an insured must be subject to emotional or financial hardship resulting from damage, loss, or destruction.
Principle of Utmost Good Faith
Requires that the insured and the insurer both be forthcoming with all relevant facts about the insured risk and the coverage provided for that risk.
Warranty
Promise made by the insured to the insurer that is part of the insurance contract to which the insurer must adhere.
Representation
Statement made by the proposed insured to the insurer in the application process.
Concealment
When the insured is silent about a fact that is material to the risk.
Adhesion
A characteristic of insurance that means insurance is a take-it-or-leave-it contract. the proposed insured must accept (or adhere to) the contract as written without any bargaining over the terms and conditions.
Aleatory
A characteristic of insurance meaning that monetary values exchanged by each party in an insurance agreement are unequal.
Unilateral
Only the insurer agrees to a legally enforceable promise.
Conditional
Insurer is only obligated to compensate the insured if certain conditions are met.
Agent
Legal representative of the insurer that has authority to enter into agreements on its behalf.
Broker
Legal representative of the insured who can offer products from many insurers.
General Agent
An independent business person who represents only one insurer for a designated territory.
Independent Agent
An agent that represents multiple insurers.
Surplus Lines Agent
An agent that has the authority to engage in business with out-of-state insurers in order to meet unavailable in-state consumer needs.
Express Authority
The actual authority an insurance company gives representatives (agents) via the agent's written contract.
Implied Authority
The authority that the public reasonably perceives the agent to possess, even without express authority.
Apparent Authority
The insured is led to believe that the agent has authority, either express or implied, where no such authority actually exists.
Riders (Endorsements)
Written additions to an insurance contract that modify the original provisions.
Actual Cash Value
Calculated as replacement cost minus functional depreciation.
Deductible
A stated amount of money the insured is required to pay on a loss before the insurer will make any payments under the policy.
Co-payments
In health insurance policies, amounts an insured must pay in addition to the deductible to receive certain covered services.
Coinsurance
the percentage of financial responsibility the insured and the insurer must share under the policy.
Capital Stock Insurance Company
Operate for-profit and owned by stockholders.
Mutual Insurance Company
Owned by policyholders and distributes profit in the form of policy dividends.
Risk-Based Capital model
Adjusts and insurer's capital base according to the amount and types of risk to which it is exposed.