New Mexico Life and Health Exam with accurate
detailed solutions
Insurance - correct answer✔✔A method of spreading the result of financial loss among a
large number people.
Life Insurance - correct answer✔✔A contract under which one party (the insurer) in
consideration of the premium payment, agrees to pay an amount stipulated in the contract
to a designated person (the beneficiary) upon the occurrence of a contingency defined in the
contract (usually that of death).
Indemnity - correct answer✔✔The concept that insurance should restore the insured, in
whole or in part, to the condition he enjoyed before the loss.
Risk - correct answer✔✔The uncertainty of financial loss.
The 3 Types of Risk - correct answer✔✔1) Pure Risk - there is only a chance of loss and
there is no possibility of gain.
2) Speculative Risk - involves both an uncertainty of loss and of gain.
3) Insurable Risk
Insurable Risk - correct answer✔✔The more closely a risk align with the following
characteristics, the more insurable it is: Due to chance, measurable/predictable, it is based
upon a large enough pool, so that the law of large numbers allows for the accurate
prediction of loss, and there must be a significant potential for economic loss.
Methods of Handling Risk - correct answer✔✔-Avoidance
, -Retention
-Sharing
-Reduction
Exposure - correct answer✔✔A measure of vulnerability of loss, usually expressed in dollars
or units, to which an insurance rate is applied.
Hazard - correct answer✔✔A specific situation that introduces or increases the probability
of occurrence of a loss.
The conditions that increase risk or the chance of a loss occurring: - correct
answer✔✔Physical - arise from material, structural, or operation features of a risk situation.
Moral - The Insured's habits.
Morale - Careless attitude on the part of the insured that increased the chance of loss.
Legal - Court of legislative actions increases the risk of loss.
Peril - correct answer✔✔The cause of a potential loss.
Loss - correct answer✔✔The happening of the event for which insurance pays.
The 4 Elements of a Legal Contract - correct answer✔✔1) Offer and Acceptance
2) Consideration
3) Legal Purpose
4) Competent Parties
Estoppel - correct answer✔✔The concept that, once a fact has been admitted to be true by a
previous action, it can no longer be denied to be true.
detailed solutions
Insurance - correct answer✔✔A method of spreading the result of financial loss among a
large number people.
Life Insurance - correct answer✔✔A contract under which one party (the insurer) in
consideration of the premium payment, agrees to pay an amount stipulated in the contract
to a designated person (the beneficiary) upon the occurrence of a contingency defined in the
contract (usually that of death).
Indemnity - correct answer✔✔The concept that insurance should restore the insured, in
whole or in part, to the condition he enjoyed before the loss.
Risk - correct answer✔✔The uncertainty of financial loss.
The 3 Types of Risk - correct answer✔✔1) Pure Risk - there is only a chance of loss and
there is no possibility of gain.
2) Speculative Risk - involves both an uncertainty of loss and of gain.
3) Insurable Risk
Insurable Risk - correct answer✔✔The more closely a risk align with the following
characteristics, the more insurable it is: Due to chance, measurable/predictable, it is based
upon a large enough pool, so that the law of large numbers allows for the accurate
prediction of loss, and there must be a significant potential for economic loss.
Methods of Handling Risk - correct answer✔✔-Avoidance
, -Retention
-Sharing
-Reduction
Exposure - correct answer✔✔A measure of vulnerability of loss, usually expressed in dollars
or units, to which an insurance rate is applied.
Hazard - correct answer✔✔A specific situation that introduces or increases the probability
of occurrence of a loss.
The conditions that increase risk or the chance of a loss occurring: - correct
answer✔✔Physical - arise from material, structural, or operation features of a risk situation.
Moral - The Insured's habits.
Morale - Careless attitude on the part of the insured that increased the chance of loss.
Legal - Court of legislative actions increases the risk of loss.
Peril - correct answer✔✔The cause of a potential loss.
Loss - correct answer✔✔The happening of the event for which insurance pays.
The 4 Elements of a Legal Contract - correct answer✔✔1) Offer and Acceptance
2) Consideration
3) Legal Purpose
4) Competent Parties
Estoppel - correct answer✔✔The concept that, once a fact has been admitted to be true by a
previous action, it can no longer be denied to be true.
