Health Insurance Exam Webce|A+ Graded
Pure Risk
Chance of loss but not gain
Peril
Cause of loss
Hazard
Increases the chance of peril
Managing risk
Only way to manage risk is to transfer it ; buy Insurance
To be insurable
Risk MUST BE, definable, measurable, beyond the insured control, common to large group, NOT
catastrophic
Adverse Selection
When someone is a high risk tries to buy insurance
Risk Management
How we deal with risk
Types of risks
Pure and Speculative
Pure risk
Possibility of a loss, no gain; death or serious injury/ disability
Speculative Risk
Chance of loss OR again; gambling, stock market, these are not insurable
Loss
unplanned reduction in economic value
Insurable loss
Direct; immediate result of an insured peril or indirect; loss as a result to direct loss
Exposure unit
Measured by insurer based on the number of units of possible loss during underwriting process
Life-health insurance perils
Death, disability, sickness
, Hazard
Cigarette smoking, poor diet, excessive alcohol consumption
Moral Hazard
Conscious willingness to defraud, lie on application or claim form
Morale Hazard
State of mind that creates indifference to loss. Reckless
Physical Hazard
Chronic diseases, dangerous activities, working in dangerous conditions
Risk management techniques
avoidance, reduction, acceptance, transfer (insurance)
Underwriting
The process of reviewing, accepting or rejecting applications for insurance.
Law of Large Numbers
mathematical principle of probability. The greater the number of incidence of a random process, the
more expected number of incidence and the actual number of incidents tend to become the same.
mortality
death. Mortality rate-life insurance premiums
Morbidity
illness. Morbidity table- health insurance premiums
Adverse Selection
A high-risk person benefits more from insurance, so is more likely to purchase it. AVOID
Insurance producer
Represents a single insurer
Independent broker
Represents servers insurers
Agent Authority
express, implied, apparent
Law of Agency
The law that governs the relationship between a principal and his or her agent.
Pure Risk
Chance of loss but not gain
Peril
Cause of loss
Hazard
Increases the chance of peril
Managing risk
Only way to manage risk is to transfer it ; buy Insurance
To be insurable
Risk MUST BE, definable, measurable, beyond the insured control, common to large group, NOT
catastrophic
Adverse Selection
When someone is a high risk tries to buy insurance
Risk Management
How we deal with risk
Types of risks
Pure and Speculative
Pure risk
Possibility of a loss, no gain; death or serious injury/ disability
Speculative Risk
Chance of loss OR again; gambling, stock market, these are not insurable
Loss
unplanned reduction in economic value
Insurable loss
Direct; immediate result of an insured peril or indirect; loss as a result to direct loss
Exposure unit
Measured by insurer based on the number of units of possible loss during underwriting process
Life-health insurance perils
Death, disability, sickness
, Hazard
Cigarette smoking, poor diet, excessive alcohol consumption
Moral Hazard
Conscious willingness to defraud, lie on application or claim form
Morale Hazard
State of mind that creates indifference to loss. Reckless
Physical Hazard
Chronic diseases, dangerous activities, working in dangerous conditions
Risk management techniques
avoidance, reduction, acceptance, transfer (insurance)
Underwriting
The process of reviewing, accepting or rejecting applications for insurance.
Law of Large Numbers
mathematical principle of probability. The greater the number of incidence of a random process, the
more expected number of incidence and the actual number of incidents tend to become the same.
mortality
death. Mortality rate-life insurance premiums
Morbidity
illness. Morbidity table- health insurance premiums
Adverse Selection
A high-risk person benefits more from insurance, so is more likely to purchase it. AVOID
Insurance producer
Represents a single insurer
Independent broker
Represents servers insurers
Agent Authority
express, implied, apparent
Law of Agency
The law that governs the relationship between a principal and his or her agent.
