Insurance Fundamentals Quiz

Insurance serves to transfer the financial risk of potential losses from an individual or entity to an insurance company.

Collision insurance provides coverage for damage to the insured's vehicle resulting from collisions with other objects or vehicles.

Investment insurance is not a recognized category; it is not a form of insurance that covers financial investments against market risks.

The declaration page of an insurance policy offers a concise overview of the coverage, policy limits, and essential details about the policyholder.

Renters insurance provides coverage for personal property and liability protection for individuals renting homes or apartments.

A deductible is the initial amount of a claim that the policyholder must pay before the insurance company begins covering the remaining costs.

Term life insurance offers coverage for a specified period, providing a death benefit if the insured passes away during that term.

Actuaries are professionals in the insurance industry responsible for analyzing risks and using mathematical models to assess and manage potential financial impacts.

Underwriting is the process of assessing and approving insurance applications, determining the level of risk and premium rates for coverage.

Coinsurance in health insurance involves the insured and the insurer sharing the costs of medical expenses after the deductible is met.

Ethnicity is not a legitimate factor in determining insurance premiums; insurance rates are typically based on risk factors, demographics, and other relevant criteria.

Reinsurance is a practice where insurance companies buy additional coverage to protect themselves from excessive losses on policies they have underwritten.

Subrogation allows the insurance company to seek reimbursement from a third party responsible for the damages or losses incurred by the insured.

Adverse selection occurs when individuals with higher risk levels are more likely to purchase insurance, leading to imbalances in risk pools.