#1
Which of the following best defines insurance?
A type of investment
A contract between two parties where one party agrees to compensate the other for specified losses
A government subsidy program
A form of taxation
#2
What is a premium in the context of insurance?
The amount of money paid by an insured party to an insurer for coverage
The maximum amount an insurance company is liable to pay in the event of a claim
The legal document outlining the terms and conditions of the insurance contract
The process of evaluating risk for insurance purposes
#3
Which of the following is an example of a peril in insurance terminology?
Fire
Policyholder
Premium
Actuary
#4
What does the 'deductible' refer to in an insurance policy?
The amount paid by the insured before the insurance coverage kicks in
The maximum amount an insurer will pay for a covered loss
The total amount of coverage provided by the insurance policy
The legal document outlining the terms and conditions of the insurance contract
#5
What is 'renewal' in insurance?
The process of an insured switching to a different insurance company
The process of extending an existing insurance policy beyond its expiration date
The process of an insurer assessing and accepting risks
The process of filing an insurance claim
#6
Which of the following is NOT a type of insurance?
Life insurance
Health insurance
Weather insurance
Cryptocurrency insurance
#7
What is subrogation in the insurance context?
The process of an insurer transferring part of its risk to another insurance company
The process of an insurer suing a third party responsible for a loss to recover the amount paid to the insured
A type of insurance fraud
The process of an insurer canceling a policy due to non-payment of premiums
#8
What does the term 'underwriting' refer to in insurance?
The process of an insurer assessing and accepting risks
The process of an insurer paying out claims
The process of an insurer marketing its policies to potential customers
The process of an insurer calculating premiums
#9
What is reinsurance in the insurance industry?
The process of insuring oneself against losses by purchasing insurance from another insurer
The process of spreading risk among multiple insurers
The process of an insurer transferring part of its risk to another insurance company
The process of an insurer suing a third party responsible for a loss to recover the amount paid to the insured
#10
What is the purpose of the National Flood Insurance Program (NFIP) in the United States?
To provide insurance coverage for damages caused by earthquakes
To provide insurance coverage for damages caused by floods
To provide insurance coverage for damages caused by hurricanes
To provide insurance coverage for damages caused by wildfires
#11
Which of the following is NOT a type of life insurance?
Whole life insurance
Term life insurance
Variable life insurance
Collision insurance
#12
Which principle of insurance states that the insured should not profit from insurance?
Principle of indemnity
Principle of utmost good faith
Principle of subrogation
Principle of insurable interest
#13
What does the 'exclusion' clause in an insurance policy specify?
The maximum amount an insurer will pay for a covered loss
The specific risks or circumstances that are not covered by the insurance policy
The process of evaluating risk for insurance purposes
The legal document outlining the terms and conditions of the insurance contract
#14
In insurance, what is 'actuarial science' primarily concerned with?
Calculating insurance premiums and reserves
Marketing insurance policies
Assessing and accepting risks
Paying out claims
#15
What does 'co-insurance' refer to in the context of insurance?
The process of sharing insurance risks between multiple insurers
A clause in an insurance policy specifying certain risks or circumstances that are not covered
The percentage of covered expenses that the insured must pay after the deductible is met
The process of transferring part of the risk to another insurer
#16
In insurance, what does 'risk management' involve?
Calculating insurance premiums
Marketing insurance policies
Assessing and reducing the likelihood and impact of potential losses
Paying out claims
#17
What is 'residual market' in insurance?
The market for insurance policies sold at a discount
The market for high-risk individuals who cannot obtain insurance coverage through normal channels
The market for reinsurance contracts
The market for insurance policies with low deductibles