Sjd Chapter 1: Purpose Of Life And Health Insurance

7 Questions | Total Attempts: 125

SettingsSettingsSettings
Please wait...
Life And Health Quizzes & Trivia

There are a lot of people who have dependents and would like to ensure that when their time to die comes their dependents will have some cushion money to keep their lives stable before they find their balance after the death. Do you know what else might be the reason as to why people place a lot of importance on life and health insurance? Take this test based on chapter one to find out.


Questions and Answers
  • 1. 
    Which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disability within a certain group during a specific time?
    • A. 

      Principle of large loss

    • B. 

      Quantum insurance principle

    • C. 

      Indemnity law

    • D. 

      Law of large numbers

  • 2. 
    The owner of a camera store is worried that her new employees may help themselves to items from inventory without paying for them.  What kind of hazard is described?
    • A. 

      Physical hazard

    • B. 

      Ethical hazard

    • C. 

      Morale hazard

    • D. 

      Moral hazard

  • 3. 
    All of the following actions are examples of risk avoidance EXCEPT
    • A. 

      Bill won't fly in an airplane

    • B. 

      Wendy keeps her money out of the stock market

    • C. 

      Pat pays his insurance premium

    • D. 

      John never drives a car

  • 4. 
    Which of the following statements is CORRECT?
    • A. 

      Only speculative risks are insurable

    • B. 

      Only pure risks are insurable

    • C. 

      Both pure risks and speculative risks are insurable

    • D. 

      Neither pure risks nor speculative risks are insurable

  • 5. 
    In the insurance business, risk can best be defined as
    • A. 

      Sharing the possibility of a loss

    • B. 

      Uncertainty regarding the future

    • C. 

      Uncertainty regarding financial loss

    • D. 

      Uncertainty regarding when death will occur

  • 6. 
    Which of the following best describes the function of insurance
    • A. 

      It is a form of legalized gambling

    • B. 

      It spreads financial risk over a large group to minimize the loss to any one individual

    • C. 

      It protects against living too long

    • D. 

      It creates and protects risks

  • 7. 
    Tom buys his wife Mary a $50,000 diamond ring.  When she is not wearing the ring, she keeps it in a safe deposit box at a local bank.  This is an example of risk
    • A. 

      Avoidance

    • B. 

      Reduction

    • C. 

      Retention

    • D. 

      Transference