, NEW YORK LIFE AND HEALTH
INSURANCE EXAM QUESTIONS AND
ANSWERS 100% CORRECT!
What is the difference between pure and speculative risk? - ANSWER Pure risk refers
to situations that can only result in a loss or no charge. There is no opportunity for
financial gain. Pure risk is the only type of risk that insurance companies are willing to
accept.
What is the definition of a peril? - ANSWER A peril is the cause of a possible loss.
What is adverse selection? - ANSWER the tendency of persons with a higher-than-
average probability of loss to purchase and maintain more insurance than risks who
present lower probability.
Name 5 Methods of handling risks? - ANSWER The 5 methods of handling risk are
avoidance, retention, sharing, reduction and transfer.
What is considered in determining the amount of personal insurance using the human
life value approach? - ANSWER The human life value approach gives the insured an
estimate of what would be owed to the family in the event of the premature death of the
insured. It calculates an individuals life value by looking at the insured's wages, inflation,
the number of years to retirement, and the time value of money.
Define Aleatory contract. - ANSWER An Aleatory contract is a contract in which
participating parties exchange unequal amounts. Insurance contracts are aleatory in
that the amount the insured will pay in premiums is is unequal to the amount the insurer
will pay in the event of a loss.
Identify the difference between the domestic, foreign and alien insurers? - ANSWER A
domestic insurer is an insurance company that is incorporated in the state.
A foreign insurer is an insurance company that is incorporated in another state.
An alien insurer is an insurance company that has incorporated outside of the United
State.
INSURANCE EXAM QUESTIONS AND
ANSWERS 100% CORRECT!
What is the difference between pure and speculative risk? - ANSWER Pure risk refers
to situations that can only result in a loss or no charge. There is no opportunity for
financial gain. Pure risk is the only type of risk that insurance companies are willing to
accept.
What is the definition of a peril? - ANSWER A peril is the cause of a possible loss.
What is adverse selection? - ANSWER the tendency of persons with a higher-than-
average probability of loss to purchase and maintain more insurance than risks who
present lower probability.
Name 5 Methods of handling risks? - ANSWER The 5 methods of handling risk are
avoidance, retention, sharing, reduction and transfer.
What is considered in determining the amount of personal insurance using the human
life value approach? - ANSWER The human life value approach gives the insured an
estimate of what would be owed to the family in the event of the premature death of the
insured. It calculates an individuals life value by looking at the insured's wages, inflation,
the number of years to retirement, and the time value of money.
Define Aleatory contract. - ANSWER An Aleatory contract is a contract in which
participating parties exchange unequal amounts. Insurance contracts are aleatory in
that the amount the insured will pay in premiums is is unequal to the amount the insurer
will pay in the event of a loss.
Identify the difference between the domestic, foreign and alien insurers? - ANSWER A
domestic insurer is an insurance company that is incorporated in the state.
A foreign insurer is an insurance company that is incorporated in another state.
An alien insurer is an insurance company that has incorporated outside of the United
State.
