UBM588 - Quiz Chapter 4 (A) KBA2433C

Contributions from many insured is called

• Loss

• Premium

• Common Pool

The characteristic of ____ risk is

i. fortuitous losses

ii. financial value

iii. insurable interest

iv. large number of similar risks (homogenous exposure)

v. pure risks

vi. legal and not against public policy

vii. no catastrophic losses (particular risks)

viii. reasonable premium

• insurable

• measurable

• recognizable

This statements is about -

In addition to protection, insurance acts as a means of committed saving, especially in the case of endowment insurance. The investment element of this type of insurance contract is a form of saving while the protection provides compensation in the event of death or permanent disablement. Hence, the policy provides protection and savings to the insured.

• Stimulate business enterprise

• Encourage saving

• Reduce losses

Insurance acts as a risk transfer mechanism where the insured, in exchange for protection, pays a sum of ____ to the insurance company and transfer the responsibility of loss or damage to the insurer.

• risks

• premium

• profit

This statement -

Insurance is a process through which losses suffered by a few are spread among borne by many through the contribution of premium to a common pool.

is about ____of insurance

• concept

• risk

• operation

____ of insurance are peace of minds, lost control, social benefits, investment of fund and invisible earnings.

• Benefits

• Concepts

• Functions

Invisible export is the ____.

• direct functions of insurance

• indirect functions of insurance

• risk transfer mechanism

This statement is about -

With insurance, business enterprises and individuals are able to avoid the necessity of freezing capital to provide financial protection against losses. Insurance therefore provides a means of stabilizing costs involved in managing risks by the payment of premium to get compensation in the event of a loss. The fund released would be available for investment.

• Reduce fear and worry

• Release funds otherwise tied up in reserves

• Stimulate business enterprise

This statement -

An agreement whereby a group of individuals facing similar risks can share the fortuitous losses of the unlucky few by the transfer of such risk to the insurer who agrees to compensate the losses.

is about

• risk

• insurance

• finance

The operation of the common pool is based on the successful application of the ____.

• funds of the pool

• pooling of risks

• law of large numbers