wisconsin life insurance exam with
Verified Answers
The uncertainty or chance of a loss occurring. - CORRECT ANSWER risk
situations that can only
... [Show More] result in a loss or no change. no opportunity for financial gain.
only type of risk that insurance companies accept. - CORRECT ANSWER pure risk
involves the opportunity for either loss or gain. - CORRECT ANSWER speculative risk
A unit of measure used to determine rates charged for insurance coverage. age,
medical history, occupation, sex - CORRECT ANSWER exposure
Conditions or situations that increase the probability of an insured loss occurring. -
CORRECT ANSWER hazards
individual characteristics that increase the chances of the cause of loss. past medical
history, condition at birth like blindness - CORRECT ANSWER physical hazards
Tendencies towards increased risk. Involve evaluating the character and reputation of
the proposed insured. Refer to those applicants who may lie on an application for
insurance, or in the past, have submitted fraudulent claims against an insurer. -
CORRECT ANSWER moral hazards
loss that results from the insured worrying less about losses - CORRECT ANSWER
morale hazards
the reduction, decrease, or disappearance of value of the person or property insured in
a policy. - CORRECT ANSWER loss
Planned assumption of risk by an insured through the use of deductibles, co-payments,
or self-insurance. - CORRECT ANSWER retention
dealing with risk for a group of individual persons or businesses with the same or similar
exposure to loss to share the losses that occur within that group. - CORRECT
ANSWER sharing
attempt to lessen the possibility or severity of a loss - CORRECT ANSWER reduction
the larger the number of people with a similar exposure to loss, the more predictable
actual losses will be. - CORRECT ANSWER law of large numbers
the insuring of risks that are more prone to losses than the average risk - CORRECT
ANSWER adverse selection
Owned by the stockholders who provide the capital necessary to establish and operate
the insurance company and who share in any profits or losses. - CORRECT ANSWER
stock companies
policy owners do not share in profits or losses. does not pay dividends to policyowners,
however, taxable dividends are paid to stockholders. - CORRECT ANSWER
nonparticipating
owned by the policyowners and issue participating policies. - CORRECT ANSWER
mutual companies
policyowners are entitled to dividends. non taxable. - CORRECT ANSWER participating
policies
An organization formed to provide insurance benefits for members of an affiliated lodge,
religious organization, or fraternal organization with a representative form of
government. only sell to members and considered charitable institutions and not
insurers - CORRECT ANSWER fraternal benefit society
not an insurance company. provides support facilities for underwriters or groups of
individuals that accept insurance risks. - CORRECT ANSWER lloyds
is a liability insurance company owned by its members. purpose is to assume and
spread all or part of the liability of its group member. - CORRECT ANSWER risk
retention group
entity which offers insurance to groups of similar business with similar exposures to risk.
- CORRECT ANSWER risk purchasing group
insurance resulting from an interchange of reciprocal agreements of indemnity among
persons known as subscribers, - CORRECT ANSWER reciprocal
in state - CORRECT ANSWER domestic insurer
out of state - CORRECT ANSWER foreign insurer
out of country - CORRECT ANSWER alien
1 independent agent represents several companies, nonexclusive, commissions on
personal sales, business renewal with any company - CORRECT ANSWER
independent agency system
1 agent represents 1 company
Exclusive
Commissions on personal sales
Renewals can only be placed with the appointing insurer - CORRECT ANSWER
exclusive agency system
-General agent-entrepreneur represents 1 company
-Exclusive
-Compensation and commissions
-Appoints subagents - CORRECT ANSWER general agency system
-Branch manager (supervises agents)
-Salaried
-Agents can be insurer's employees or independent contractors - CORRECT ANSWER
managerial system
- No agents
- Company advertises directly to consumers
- Consumers apply directly to the company - CORRECT ANSWER direct response
marketing system
A contract under which one insurance company (the reinsurer) indemnifies another
insurance company for part or all of its liabilities. - CORRECT ANSWER reinsurance
represents the insurer - CORRECT ANSWER agent [Show Less]