#1
What is the main function of insurance?
To transfer risk from an individual to an insurance company
ExplanationRisk transfer mechanism
#2
Which of the following is NOT a principle of insurance?
Risk Management
ExplanationExclusion of non-insurable risks
#3
Which of the following is NOT a type of life insurance?
Property Life Insurance
ExplanationNon-existent insurance type
#4
What does the 'Policy Period' refer to in insurance?
The duration for which the insurance policy remains active
ExplanationTimeframe of insurance coverage
#5
What does 'Exclusion' mean in an insurance policy?
A provision that eliminates coverage for certain risks or conditions
ExplanationSpecific risk elimination
#6
What does 'Insurable Interest' mean in insurance?
An interest that an insured party has in the subject matter of the insurance
ExplanationRequired to obtain insurance
#7
Which type of insurance covers losses caused by accidents such as fire, theft, or natural disasters?
Property Insurance
ExplanationProtection for physical assets
#8
What is a 'Deductible' in insurance?
The amount an insured person must pay out of pocket before the insurance company pays the remaining expenses
ExplanationOut-of-pocket expense for insured
#9
What is 'Reinsurance' in the context of insurance?
Insurance purchased by an insurance company from another insurance company to mitigate risk
ExplanationSecondary layer of risk coverage
#10
What is 'Underwriting' in insurance?
The process of evaluating and determining the risk of insuring a particular person or asset
ExplanationRisk assessment for insurance approval
#11
What is 'Moral Hazard' in insurance?
The risk of loss due to an insured person's unethical behavior
ExplanationEthical behavior impact on risk
#12
What is the purpose of 'Coinsurance' in insurance?
To share the risk of loss between the insured and the insurer
ExplanationShared responsibility for loss
#13
What is 'Loss Ratio' in insurance?
The ratio of claims paid to premiums earned
ExplanationPercentage of premiums used for claims
#14
What is 'Risk Pooling' in insurance?
The process of spreading the risk of potential financial loss among a large number of policyholders
ExplanationShared risk distribution