214 FLORIDA INSURANCE ACTUAL EXAM WITH QUESTIONS AND ANSWERS VERIFIED

Life Insurance - This type of insurance pays when an insured has died to offset the economic loss to dependents. A) life B) health C) annuity D) property and casualty Policy - An insurance _________ is the device used by insurance companies to accumulate funds to meet uncertain losses. Risk Pooling - Insurance companies aggregate (collect) premiums to make claims payments - the aggregating of premiums to pay claims is called _____ ___________. Exposure Units - The more _______ units an insurance company has to study the more likely any projections made will equal what actually occurs. Pure Risk - Which type of risk is ONLY the chance of loss? A) speculative risk B) gambling risk C) pure risk D) risk and return Morale Hazard - A ________ hazard is an UNCONSCIOUS mental attitude which increases the probability and severity of loss. Moral Hazard - An insured that purposely inflates the value of his claim is guilty of a _______ hazard. A) typical B) physical C) moral D) morale Peril - A _______ is defined as a contingency that may cause a loss and a hazard is a condition that increases the likelihood of a loss from a _______. Risk Avoidance - Never flying in a plane to reduce the likelihood of being involved in an airplane crash is an example of? A) risk reduction B) risk retention C) risk avoidance D) risk transfer Risk Reduction - Risk ___________ involves efforts to mitigate the exposure "to" and effects "of" a loss. Risk Retention - For an individual who owns a motorcycle and does not insure it what type of so called risk technique is being used by the individual if the motorcycle is stolen and the insured pays for its loss out of his own savings? A) risk avoidance B) risk reduction C) risk retention D) risk transfer Insurance - What is the most common form of risk transfer? A) risk retention B) contractual transfer C) insurance D) luck Unpredictable Loss Exposures are not Insurable - Which of the following is NOT an element of an insurable risk? A) exposure to loss must be due to chance B) exposure to loss must be definite and measurable C) exposure to loss cannot be catastrophic D) exposure to loss must be entirely unpredictable Human Life Value - _______ _______ _______is the economic valuation of an individual based on the individual's earning potential both present and future. Adverse Selection - Tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others - also, tendency of policyowners to take advantage of favorable options in insurance contracts. The exposure to loss must be - (a) due to chance (b) definite and measurable (c) predictable (d) must be large (e) exposure to loss must be randomly selected and (f) cannot be catastrophic - What are the Elements of Insurable Risk?