General Insurance

cso683's version from 2016-01-26 13:34

General Insurance (Terms)

Question Answer
Definition of InsuranceA contract where the insurer agrees to indemnify the insured against some loss
Types of RiskPure (Insurable), Speculative (Gambling, NOT insurable)
Exposure - Definition and Its componentsUnit of Measure used to determine premiums. For Life Insurance: SOMA Sex, Occupation, Medical History, Age
Basis of InsuranceShare Risk among the members of a large homogeneous group
Type of HazardsMPM (Moral, Physical, Morale)
Moral (Hazard)Tendencies towards increased risk (those who have lied on applications in the past). Agent should evaluate the character of insured.
Physical (Hazard)Past Medical History
Morale (Hazard)State of mind that cause indifference towards risk
PerilCauses of loss insured against
Peril (Life)Financial loss due to premature death
Peril (Health)Medical Expense / loss of income
Peril (Property)Loss of Physical Property or loss of income producing capability
Peril (Casualty)Loss or damage to property and resulting liability
Methods of Handling RiskSTAR (Share, Transfer, Avoid, Retention)
Elements of Insurable RiskDRSCC (Definite and measurable, Randomly selected (from a large group), Statistically Predictable, due to Chance, not Catastrophic
Chain of Insurance TermsHazards (Risk) -> Perils (cause of loss) -> Loss (value of loss) -> Insurance (transfers loss)

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