#1
Which of the following is not a fundamental element of an insurance contract?
Investment
ExplanationNot a core component; insurance primarily deals with risk management.
#2
What is the purpose of an insurance premium?
To provide coverage
ExplanationPayment for the insurance coverage provided by the insurer.
#3
Which type of insurance provides coverage for damage to property?
Property insurance
ExplanationInsurance protecting against damage or loss of property.
#4
What is an insurance policy's 'declaration page'?
The page that summarizes policy coverage and terms
ExplanationOverview of coverage details and terms within an insurance policy.
#5
In insurance, what is 'exclusion'?
A provision that limits coverage for certain risks
ExplanationSpecifies what the insurance policy does not cover.
#6
Which of the following is not a type of insurance policy?
Renewable life insurance
ExplanationLife insurance typically doesn't have a 'renewable' category.
#7
What is a deductible in insurance?
The minimum amount the insured must pay before the insurer pays
ExplanationThe initial payment made by the insured before the insurer covers the rest.
#8
In insurance, what does the term 'indemnity' refer to?
The policyholder's financial compensation for loss or damage
ExplanationReimbursement for financial losses incurred by the policyholder.
#9
What is the principle of utmost good faith in insurance contracts?
Policyholders must disclose all relevant information truthfully
ExplanationThe requirement for honesty and full disclosure by both parties.
#10
What is the purpose of reinsurance?
To transfer risk from the insurer to another insurance company
ExplanationOffloading risk to another insurance company for stability.
#11
What does the term 'actuary' refer to in insurance?
A professional who assesses risk and sets insurance premiums
ExplanationExpert responsible for evaluating risk and determining premium rates.
#12
What is 'underwriting' in the context of insurance?
The process of assessing risk and determining premiums
ExplanationEvaluation of risk factors to set appropriate insurance terms and rates.
#13
What is a 'rider' in insurance terminology?
An amendment or addition to an insurance policy
ExplanationAn extra provision added to an insurance policy for specific coverage.
#14
What is subrogation in insurance?
The right of the insurer to pursue legal action against a third party responsible for the loss
ExplanationThe insurer's right to recover losses from responsible third parties.
#15
What is 'policyholder surplus' in insurance?
The difference between an insurer's assets and liabilities
ExplanationMeasure of the financial strength and stability of an insurance company.
#16
What is the principle of 'subrogation' in insurance?
The right of the insurer to pursue legal action against a third party responsible for the loss
ExplanationTransfer of the insured's rights to the insurer for recovery from liable third parties.