New Mexico health and life
insurance exam
Comprehensive Questions with
Verified Answers Graded A+
risk - Answer: Uncertainty of financial loss or a chance of loss
hazard - Answer: A hazard is a condition that makes a peril more likely to happen or that
increases the seriousness of a loss
hazard - Answer: Any factor that gives rise to peril
peril - Answer: cause of loss
Peril - Answer: And immediate specific event causing loss in giving rise to risk
Physical Hazard - Answer: Arises from material structural for operational features such as a
slippery floor or unsanitary conditions
Moral hazard - Answer: Arises from people's habits and values such as filing a false claim
Morale Hazard - Answer: Arises from human carelessness or a responsibility such as bailing to
take safety precaution
, exposure - Answer:
loss - Answer: Last must be measurable, the insurer must be able to place a specific monetary
value
Methods of Handling Risk - Answer: Avoidance
Retention
Sharing
Reduction
TransferAvoidance
Elements of insurable risks - Answer: 1.Large numbers of homogeneous units, I large number of
similar exposure units is necessary in order for the pooling in sharing mechanisms of insurance
to function
2.Los must be measurable by being able to place a specific monetary value on exposures and
losses in order to be able to calculate rates in premiums and reach settlements
3. Lost must be uncertain, insurance covers purists which messed inns involve an uncertainty of
loss
4.Economic hardship, there must be a significant potential for economic loss a.k.a. a higher
dollar value
5.Exclusion of catastrophic perils, Mini policies exclude losses resulting from war nuclear
hazards flooded earthquake because the insurance system would collapse if we covered events
that caused widespread losses to large numbers at the same time
Adverse selection - Answer: Those who are most likely to file claims are the ones most likely to
purchase insurance
insurance exam
Comprehensive Questions with
Verified Answers Graded A+
risk - Answer: Uncertainty of financial loss or a chance of loss
hazard - Answer: A hazard is a condition that makes a peril more likely to happen or that
increases the seriousness of a loss
hazard - Answer: Any factor that gives rise to peril
peril - Answer: cause of loss
Peril - Answer: And immediate specific event causing loss in giving rise to risk
Physical Hazard - Answer: Arises from material structural for operational features such as a
slippery floor or unsanitary conditions
Moral hazard - Answer: Arises from people's habits and values such as filing a false claim
Morale Hazard - Answer: Arises from human carelessness or a responsibility such as bailing to
take safety precaution
, exposure - Answer:
loss - Answer: Last must be measurable, the insurer must be able to place a specific monetary
value
Methods of Handling Risk - Answer: Avoidance
Retention
Sharing
Reduction
TransferAvoidance
Elements of insurable risks - Answer: 1.Large numbers of homogeneous units, I large number of
similar exposure units is necessary in order for the pooling in sharing mechanisms of insurance
to function
2.Los must be measurable by being able to place a specific monetary value on exposures and
losses in order to be able to calculate rates in premiums and reach settlements
3. Lost must be uncertain, insurance covers purists which messed inns involve an uncertainty of
loss
4.Economic hardship, there must be a significant potential for economic loss a.k.a. a higher
dollar value
5.Exclusion of catastrophic perils, Mini policies exclude losses resulting from war nuclear
hazards flooded earthquake because the insurance system would collapse if we covered events
that caused widespread losses to large numbers at the same time
Adverse selection - Answer: Those who are most likely to file claims are the ones most likely to
purchase insurance
