unit 1 IRM even sem

What is the definition of insurance?

• Insurance is a contract that provides financial protection against losses.

• A method of saving money for retirement.

• A type of investment that guarantees high returns.

• A legal document that outlines property ownership.

List three characteristics of insurance.

• 1. Risk management 2. Pooling of resources 3. Contractual agreement

• Guaranteed returns

• Individual investment

• Short-term savings

What are the key principles of a contract of insurance?

• Policy Duration, Premium Payment, and Claims Process

• Underwriting, Risk Pooling, and Loss Adjustment

• Risk Assessment, Liability, and Coverage

• The key principles of a contract of insurance are Utmost Good Faith, Insurable Interest, Indemnity, Contribution, and Subrogation.

Explain the general concepts of insurance.

• Insurance eliminates all financial risks.

• Insurance guarantees profits regardless of risk.

• Insurance is a financial arrangement that provides protection against potential future losses or damages through risk transfer and pooling.

• Insurance is only for health-related issues.

How does insurance relate to hedging?

• Insurance is a form of risk transfer, while hedging is a risk mitigation strategy.

• Insurance and hedging are the same concept.

• Hedging is only applicable to stock trading.

• Insurance is a type of investment strategy.

What are the main types of insurance?

• Health, life, auto, homeowners, and liability insurance

• Travel, pet, and flood insurance

• Disability, renters, and cyber insurance

• Business, credit, and investment insurance

Define the role of insurance intermediaries.

• Insurance intermediaries only provide legal advice to clients.

• Insurance intermediaries manage claims directly without involving insurers.

• Insurance intermediaries facilitate the sale and management of insurance policies between insurers and clients.

• Insurance intermediaries are responsible for underwriting insurance policies.

How does insurance contribute to economic development?

• Insurance reduces access to healthcare.

• Insurance discourages savings and investments.

• Insurance increases unemployment rates.

• Insurance contributes to economic development by providing risk management, encouraging investment, stabilizing income, and facilitating access to credit.

What is risk pooling in insurance?

• Risk pooling is the practice of grouping multiple policyholders to share financial risks in insurance.

• Risk pooling is a method of investing in stocks to minimize losses.

• Risk pooling refers to the practice of selling insurance only to low-risk policyholders.

• Risk pooling is the process of increasing premiums for high-risk individuals.

Describe the concept of insurable interest.

• Insurable interest is the requirement that all policyholders must be related to the insured item.

• Insurable interest is the requirement that a policyholder must have a financial stake in the insured item, ensuring they would suffer a loss if the item is damaged or lost.

• Insurable interest refers to the emotional attachment a policyholder has to the insured item.

• Insurable interest is the amount of insurance coverage a policyholder can purchase.