Life Agent: Section 1 - Basic Insurance Concepts And Principles

Provide financial (economic) protection against losses that may be incurred due to a chance happening (occurrence) or event.

To protect oneself against losses. The insured has to be 21 or older.

To transfer risk to an insurer. The insured has to be 65 or older.

There must be an existence of a sharing of losses by members of the group

An agreement (policy or certificate) whereby, for a set amount of money (the premium), one party (the insurer) agrees to pay the other party (the insured or his or her beneficiary) a set sum (the benefit) upon occurrence of some event)

A social device whereby individuals transfer the financial risk associated with death, illness, injury, or disability to a group of persons, and which involves accumulation of funds by the group from these individuals to meet the uncertainty of financial losses associated with death, illness, injury, or disability.

To promise to substitute future financial or economic certainty for uncertainty and to replace the unknown with a sense of security.

An agreement (policy or certificate) whereby, for a set amount of money (the premium), one party (the insurer) agrees to pay the other party (the insured or his or her beneficiary) a set sum (the benefit) upon occurrence of some event)

A device or instrument that provides the funds to meet uncertainties

A contract whereby one undertakes indemnify another against loss, damage, or liability arising from a contingent or unknown event.

A device or instrument that provides the funds to meet uncertainties

A substitution/exchange of a small certain loss (premium) for a large uncertain loss (claim). Layman's definition.

May be referred to as a written instrument, contract, or a policy

A social device that transfers risk from an individual to a group (insurer), thus pooling a large number of individuals (pure risks). Funds to cover the individual losses are raised by collecting premiums in exchange for assuming the losses up to a predetermined limit. Conceptual definition.

Uncertainty about loss exists when there is a possibility of more than one outcome.

Uncertainty about loss exists when there is a possibility of only one outcome.

The possibility of someone losing without insurance.

Pure

Speculative

Peril

There is no possibility of gain or profit from a pure risk.

Involves the possible outcome of: loss or no loss.

Involves the possibility for either loss or gain.

Only risk that insurance companies accepts

Involves the possibility of either loss or gain.

It is insurable

Not insurable

A hazard

The actual cause of the loss

An immediate specific event causing loss and giving rise to risk

Actual cause of the loss

Anything that increase the chance/likelihood that loss will occur, or the severity of a loss that does occur.

Does not actually case the damage

Moral

Personal

Morale

Physical

Legal

Deals with alcoholism and drug addiction

Associated with mental attitudes, behaviors, ethics and habits

Deals with a person's state of mind

Examples are reckless driving, socializing, paying bills late, etc.

Deals with mental attitudes, behaviors, ethics, and habits

Deals with a person's state of mind.

Deals with a person's state of mind

Associated with the law

Anything that poses a risk that can be seen, heard, touched, tasted, or smelled

Anything that deals with physicality

The chance of a certain risk ending up in court.

Deals with the mind of a person

The larger the number of similar units the more predicable the loss

The larger the group size the better for the insurance company to create prices

Used to predict losses and to establish rates

The insured benefits

Mortality and morbidity tables are based on the law of large numbers

Probability of disease or disability

Life expectancy and is the table used for life and annuity products.

Deals with when will a person die

Deals with mortality

Life expectancy table

Probability of disease or disability

The possibility of a loss

People are exposed to various types on a daily basis

Actual cause of the loss

The type of value (asset) exposed to loss (key employee, breadwinner)

The peril that causes loss

How long the loss lasts

The extant of the potential financial consequences (depletion of savings).

Property

Financial

Liability

Personal (human) and Personnel Loss Exposure

The degree of a loss a person/organization faces in regard to lawsuits brought by a third party.

The degree of loss of a person/organization faces in regard to property.

Presents the possibility of a financial loss to an individual or a family

The degree of loss of a person/organization faces in regard to property.

Presents the possibility of a financial loss to an individual or a family

The degree of a loss a person/organization faces in regard to lawsuits brought by a third party.

Presents the possibility of a financial loss to a business because of the death of a key employee

Presents the possibility of a financial loss to an individual or a family

Loss of an important human

Presents the possibility of a financial loss to a business because of the death of a key employee

Presents the possibility of a financial loss of a friend

Presents the possibility of a financial loss to an individual or a family