Basic Principles 1 Quizz

What is insurance?

• A form of investment

• Protect against financial loss

• A way to transfer risk from insurer to insured

• A means to earn profit

What is the definition of risk?

• The responsibility for meeting losses

• The likelihood of a financial loss

• A situation involving exposure to danger beyond control

• The probability of an insured event occurring

What is a peril?

• A type of insurance policy

• A risk transfer mechanism

• An insured event

• A potential cause of loss or damage

What is a hazard?

• A risk transfer mechanism

• A type of peril

• A physical or moral feature that affects the likelihood or size of a loss

• An insured event

What is insurable interest?

• The type of insurance policy

• The financial loss suffered by the insured

• The legally recognized relationship to the subject matter of insurance

• The premium paid for insurance

What are the legal requirements to take out a contract?

• Insurance history, previous claims, previous losses

• Proof of income, credit score, criminal record

• Legal capacity, age, mental capacity, understanding of consequences

• Marital status, occupation, residential address

What is the difference between direct and indirect insurance?

• Direct insurance is for personal lines, while indirect insurance is for commercial lines

• Direct insurance is more expensive than indirect insurance

• Direct insurance is between insurer and insured, while indirect insurance involves a broker

• Direct insurance is easier to obtain than indirect insurance

What is a needs analysis?

• Gathering information to determine the best financial product for the client

• Assessing the value of a client's assets

• Determining the potential losses for an insured event

• Calculating the risk premium for insurance

What does personal insurance lines cover?

• Protection for individuals against potential losses

• Insurance for low-income workers

• Coverage for vehicles registered in a company's name

• Insurance policies for personal assets

What information does the insurer need during underwriting?

• Vehicle values, vehicle codes, trade value

• Any information that affects the risk

• Previous claims and losses, occupation, marital status

• Payment history, credit score, income level