#1
What is the primary purpose of insurance?
To transfer risk from individuals to the insurance company
ExplanationRisk transfer from individuals to insurer
#2
What does 'premium' refer to in insurance?
The amount of money paid for an insurance policy
ExplanationCost of insurance policy
#3
What is the purpose of a deductible in an insurance policy?
To share the cost of covered expenses between the insured and the insurer
ExplanationCost sharing between insured and insurer
#4
What does the term 'policyholder' refer to in insurance?
The person or entity that owns the insurance policy
ExplanationOwner of insurance policy
#5
What is the principle of indemnity in insurance?
Insurers must compensate for the actual value of the loss suffered
ExplanationCompensation for actual loss value
#6
Which of the following best describes 'underwriting' in insurance?
The process of evaluating risks and deciding whether to accept or reject applications for insurance
ExplanationRisk evaluation and policy acceptance/rejection
#7
What is 'moral hazard' in insurance?
The risk of loss due to intentional actions
ExplanationRisk from intentional actions
#8
In insurance, what is the purpose of an actuary?
To assess and calculate risks associated with insurance policies
ExplanationRisk assessment and calculation
#9
What is the difference between 'whole life' and 'term life' insurance policies?
Whole life policies have a cash value component, while term life policies do not
ExplanationCash value component in whole life policies
#10
What is the purpose of a 'rider' in an insurance policy?
To modify or add coverage to the policy
ExplanationModification or addition of coverage
#11
What is 'reinsurance' in the insurance industry?
Insurance purchased by insurance companies to protect themselves against large losses
ExplanationInsurance for insurers against major losses
#12
What is the 'exclusion' clause in an insurance policy?
A clause that specifies the types of losses or risks that are not covered by the policy
ExplanationSpecification of non-covered risks
#13
What is 'coinsurance' in insurance?
A provision where the insured agrees to share a percentage of the covered losses
ExplanationAgreement to share covered losses
#14
What is 'aggregate limit' in insurance?
The total amount the insurer will pay for all claims during a policy period
ExplanationTotal claim payment limit during policy period
#15
What is 'waiting period' in insurance?
The period of time an insured must wait before coverage begins for certain conditions
ExplanationTime before coverage starts for certain conditions