GBA 1 Canada - Key Terms with Complete Solutions

GBA 1 Canada - Key Terms with Complete Solutions Group Benefits Plan - Correct Answer Any type of plan that provides benefits to plan members as one group, independent of government-sponsored benefits Speculative Risk - Correct Answer Assumed as a conscious choice and involves three possible outcomes: loss, gain or no change Pure Risk - Correct Answer Related to events outside the risk takers control. The only possible outcome is loss - Insurance only covers this type of risk Personal Risk - Correct Answer Arises from the possibilities of death, poor health or outliving savings Loss Rate - Correct Answer the number and timing of losses Contract of Indemnity - Correct Answer The amount payable is based on the actual amount of financial loss incurred at the time of loss (e.g.. Prescription drug coverage) Valued contract - Correct Answer The amount payable is determined regardless of the actual amount of loss (e.g.. Life insurance) Adverse Selection - Correct Answer Also known as "anti-selection". People are more likely to buy insurance when they think they are going to suffer a loss Underwriting - Correct Answer The process of determining whether a particular risk is one that they want to take on and if so, what are appropriate premium levels to charge. Key steps: identify risk (hazards) and classify risk Risk Classes - Correct Answer Intended to group ind