the risks most suited to treatment by insurance are those in which there is

by Garnet Doyle Published 3 years ago Updated 2 years ago

The risks most suited to treatment by insurance are those in which there is a low probability and a high potential severity Those risks most suited to treatment by loss prevention are those in which the probability and severity are both high With respect to the purchase of insurance, the rule "consider the odds" suggests that one should

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What are the different types of risks in insurance?

The risks most suited to treatment by insurance are those in which there is: Select one: A. a low probability and a low potential severity. B. a low probability and a high potential severity. C. a high probability and a high potential severity. D. a high probability and a low potential severity.

What are the two types of people who need health insurance?

Those risks most suited to treatment by insurance are those where the potential losses have a: A. Low probability and a high severity The legal requirement that there be consideration before an insurance contract comes into existence refers to:

What does insurance cover In addition to direct harm?

The risks most suited to treatment by insurance are those in which A low probability and high potential severity Those risk suited to treatment by loss prevention are those in which

Does insurance cover damage done to a firm’s reputation?

The risks most suited to treatment by insurance are those in which there is a. a high probability and a low potential severity. b. a low probability and a high potential severity. c. a high probabi...

What is a particular risk in insurance?

Particular risk, in contrast to fundamental risk, refers to risks that affect an individual, such as a fire that destroys a family home, theft of a car or robbery. Particular risk can be insured.

Why do we do not transfer all risks by using insurance?

Explanation: Not all risks are transferable because they have variable severity. Since some risks arise regularly but are of low severity and there is no possibility of high severity, they are not transferred through insurance.Feb 14, 2021

Which of the following is a sound legal method of minimizing adverse selection?

Which of the following is a sound legal method of minimizing adverse selection? (Underwriting helps to protect the insurer against adverse selection and accepting risks that are more likely than average to suffer losses.) (Express authority is the authority stated or written in the producer's or agent's contract.)

Which of the following involves sharing an uncertain risk with another similar group?

Which of the following involves sharing an uncertain risk with another similar group? Homogeneous exposure units.

What is insurance risk transfer?

Risk transfer is a risk management and control strategy that involves the contractual shifting of a pure risk from one party to another. One example is the purchase of an insurance policy, by which a specified risk of loss is passed from the policyholder to the insurer.

Why is insurance a risk transfer mechanism?

Insurance is a risk transfer mechanism that facilitate shifting the cost of a risk away from he (insured) who runs it to an external party (insurer) in exchange for payment of premium (Marshall, 2001).

How can insurance companies reduce the risk of adverse selection and moral hazard?

Insurance companies reduce exposure to large claims by limiting their coverage or raising premiums. Insurance companies attempt to mitigate the potential for adverse selection by identifying groups of people who are more at risk than the general population and charging them higher premiums.

What is insurance risk class?

An insurance risk class is a group of individuals or companies that have similar characteristics, which are used to determine the risk associated with underwriting a new policy and the premium that should be charged for coverage.

How do insurance companies reduce their vulnerability to adverse selection?

To fight adverse selection, insurance companies reduce exposure to large claims by limiting coverage or raising premiums.

Which of the following risks may be protected against by insurance?

There are generally 3 types of risk that can be covered by insurance: personal risk, property risk, and liability risk.

What are the examples of speculative risk?

Speculative Risk: Three possible outcomes exist in speculative risk: something good (gain), something bad (loss) or nothing (staying even). Gambling and investing in the stock market are two examples of speculative risks. Each offers a chance to make money, lose money or walk away even.

Which of the following is a major risk in speculative trading?

Key Takeaways

Speculative risk refers to price uncertainty and the potential for losses in investments. Assuming speculative risk is usually a choice and not the result of uncontrollable circumstances. Pure risk, in contrast, is the potential for losses where there is no viable opportunity for any gain.

Can the insured vary the premium over the life of the policy?

the insured may vary the premium over the life of the policy. the amount of insurance may be adjusted over time. both the face amount of insurance and premium are adjustable over the life of the policy. both the face amount of insurance and premium are adjustable over the life of the policy.

What are the factors that determine the order of an insurance company?

The most important factors in selecting an insurance company, in order of importance are: financial stability, treatment of policyholders, and cost. cost, financial stability, and treatment of policyholders. agent, cost, and financial stability. treatment of policyholders, cost, and agent.

What is underwriting error?

the choice of the wrong insurance to fit a specific need. an underwriting error on the part of an insurance company. the tendency of the poorer than average risks to seek insurance to a greater extent than do the better than average risks. a loss situation in which the chance of loss cannot be determined.

What is the function of an irrevocable life insurance trust?

The principal function of an irrevocable life insurance trust is to. manage the proceeds of life insurance payable at the time of death. make premiums paid for life insurance tax-deductible by the payer. manage the distributions of cash value from insurance policies.

How to manage life insurance?

manage the proceeds of life insurance payable at the time of death. make premiums paid for life insurance tax-deductible by the payer. manage the distributions of cash value from insurance policies. avoid â incidents or ownershipâ in life insurance that makes the proceeds taxable.

What is a modified life insurance policy?

the common disaster clause. A life insurance policy that is written to insure two or more persons with the face amount payable upon the death of the first insured to die is called. a modified life policy. a convertible term policy. a joint and survivorship policy.

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