RMIN2005-Exam 2 Questions and
Answers Graded A+
Which of the following is true about insurance?
Having insurance makes whether or not an individual will have an accident more
predictable
Having insurance lowers the total amount of loss (even before the financial risk
transfer) for a pool of insureds
Insurance only works if the pool is larger enough to make losses more predictable
for the pool
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Insurance is the exchange of a large certain sum for a small uncertain sum -
Correct answer-Insurance only works if the pool is larger enough to make losses
more predictable for the pool
The principle of indemnity in insurance serves to reduce moral hazard. - Correct
answer-True
An insurable interest likely exists in all of the following cases EXCEPT:
individual takes out a life insurance policy on his or her own life
a bank requires a borrower with a mortgage on his or her home to take out a
homeowners' insurance policy
a spouse takes out a life insurance policy on the life of the other spouse
a friendly neighbor takes out a life insurance policy on his neighbor's life - Correct
answer-a friendly neighbor takes out a life insurance policy on his neighbor's life
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Answers Graded A+
Which of the following is true about insurance?
Having insurance makes whether or not an individual will have an accident more
predictable
Having insurance lowers the total amount of loss (even before the financial risk
transfer) for a pool of insureds
Insurance only works if the pool is larger enough to make losses more predictable
for the pool
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Insurance is the exchange of a large certain sum for a small uncertain sum -
Correct answer-Insurance only works if the pool is larger enough to make losses
more predictable for the pool
The principle of indemnity in insurance serves to reduce moral hazard. - Correct
answer-True
An insurable interest likely exists in all of the following cases EXCEPT:
individual takes out a life insurance policy on his or her own life
a bank requires a borrower with a mortgage on his or her home to take out a
homeowners' insurance policy
a spouse takes out a life insurance policy on the life of the other spouse
a friendly neighbor takes out a life insurance policy on his neighbor's life - Correct
answer-a friendly neighbor takes out a life insurance policy on his neighbor's life
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
