Life and Health Insurance License Exam - MN UPDATED
ACTUAL Questions and CORRECT Answers
Insurance is a... transfer of risk
What type of risk is gambling? Speculative Risk
What type of risk is a car accident? Pure Risk
What type of risk is insurable? Pure Risk
uncertainty about whether a loss will occur Risk
Risk Management Method Acronym STARR (sharing, transfer, avoidance, retention, reduction)
Insurance company purchases insurance to cover their reinsurance
own exposure to loss
Loss Equation value before loss - value after loss = total amount of loss
Reduction in the value of an asset loss
cause of a loss Peril
increases chance loss will occur Hazard
, 3 Types of hazards Physical, Moral, Morale
Moral Hazard Dishonesty
Physical Hazard physically identifiable
Morale Hazard carelessness
(STARR) two or more individuals pay a portion of any loss Sharing
incurred
(STARR) insurance Transfer
(STARR) eliminating a particular risk by not engaging in a Avoidance
certain activity
(STARR) lessening the chance a loss will occur Reduction
(STARR) individual will pay for the loss if it occurs Retention
Acronym for risks that can be insured CANHAM (calculable, affordable, non-catastrophic, homogeneous, accidental,
measurable)
Tendency for higher risk individuals to get and keep Adverse Selection
insurance more than individuals who represent a average
level of risk
Who is a stock insurer owned by? stockholders
Who oversees operations in a stock insurance company? Board of Directors
Do stock insurers give out dividends? Is so, are they Yes, Yes
taxable?
Stock insurers- assessable or non-assesable? Non Assessable
What types of policies do stock insurers issue? Non-par
Who is a mutual insurer owned by? Policyholders
Who oversees operations in mutual insurance company? Board of Directors
ACTUAL Questions and CORRECT Answers
Insurance is a... transfer of risk
What type of risk is gambling? Speculative Risk
What type of risk is a car accident? Pure Risk
What type of risk is insurable? Pure Risk
uncertainty about whether a loss will occur Risk
Risk Management Method Acronym STARR (sharing, transfer, avoidance, retention, reduction)
Insurance company purchases insurance to cover their reinsurance
own exposure to loss
Loss Equation value before loss - value after loss = total amount of loss
Reduction in the value of an asset loss
cause of a loss Peril
increases chance loss will occur Hazard
, 3 Types of hazards Physical, Moral, Morale
Moral Hazard Dishonesty
Physical Hazard physically identifiable
Morale Hazard carelessness
(STARR) two or more individuals pay a portion of any loss Sharing
incurred
(STARR) insurance Transfer
(STARR) eliminating a particular risk by not engaging in a Avoidance
certain activity
(STARR) lessening the chance a loss will occur Reduction
(STARR) individual will pay for the loss if it occurs Retention
Acronym for risks that can be insured CANHAM (calculable, affordable, non-catastrophic, homogeneous, accidental,
measurable)
Tendency for higher risk individuals to get and keep Adverse Selection
insurance more than individuals who represent a average
level of risk
Who is a stock insurer owned by? stockholders
Who oversees operations in a stock insurance company? Board of Directors
Do stock insurers give out dividends? Is so, are they Yes, Yes
taxable?
Stock insurers- assessable or non-assesable? Non Assessable
What types of policies do stock insurers issue? Non-par
Who is a mutual insurer owned by? Policyholders
Who oversees operations in mutual insurance company? Board of Directors
