#1
What is the primary purpose of insurance?
To provide financial protection against risks
ExplanationFinancial protection against risks.
#2
What is a 'rider' in insurance?
An additional provision or amendment to an insurance policy that adds or modifies coverage
ExplanationAdditional coverage provision.
#3
In health insurance, what is a 'pre-existing condition'?
A medical condition that existed before the effective date of the insurance policy
ExplanationCondition predating policy.
#4
What is 'loss of use' coverage in property insurance?
Coverage for loss of rental income due to property damage
ExplanationCoverage for rental income loss.
#5
In property insurance, what does 'actual cash value' refer to?
The current market value of the insured property without depreciation
ExplanationMarket value without depreciation.
#6
What is the purpose of an insurance policy's 'declaration page'?
To provide a summary of key information about the insurance policy
ExplanationSummary of policy information.
#7
Which regulatory body oversees insurance companies in the United States?
NAIC (National Association of Insurance Commissioners)
ExplanationRegulatory oversight by NAIC.
#8
What is a deductible in insurance?
The amount the insured must pay out-of-pocket before the insurance coverage kicks in
ExplanationInitial out-of-pocket payment.
#9
What is the role of an insurance underwriter?
To assess and evaluate risks to determine policy eligibility and premium rates
ExplanationRisk assessment for policy terms.
#10
What is the difference between 'term life' and 'whole life' insurance?
Term life has a fixed coverage period, while whole life provides coverage for the entire lifetime
ExplanationTerm vs. lifetime coverage difference.
#11
What does 'underinsured motorist coverage' protect against?
Medical expenses for injuries sustained in an accident with an underinsured driver
ExplanationCoverage for accidents with underinsured drivers.
#12
What is the purpose of the National Flood Insurance Program (NFIP) in the United States?
To offer flood insurance to property owners in participating communities
ExplanationFlood insurance for property owners.
#13
What does 'subrogation' mean in insurance terms?
The insurer's right to pursue legal action against a third party responsible for a loss to the insured
ExplanationInsurer's legal action against third party.
#14
In insurance, what is 'reinsurance' used for?
To transfer a portion of the risk from the primary insurer to another insurer
ExplanationRisk transfer to another insurer.
#15
What is 'coinsurance' in property insurance?
The insured's share of covered expenses after the deductible is met
ExplanationInsured's expense share after deductible.
#16
What is 'moral hazard' in insurance?
The risk that policyholders may intentionally cause a loss to claim insurance benefits
ExplanationRisk of intentional loss creation.
#17
What is 'adverse selection' in the context of insurance?
The tendency for high-risk individuals to seek insurance more than low-risk individuals
ExplanationHigh-risk individuals' preference for insurance.
#18
What does the '30-day grace period' in insurance refer to?
A period after the due date during which the policy remains in force despite non-payment of the premium
ExplanationGrace period after premium due date.