Understanding Insurance Principles

What is the primary purpose of insurance?

• To provide financial protection against risks and losses.

• To promote investment opportunities.

• To increase financial risks for individuals.

• To provide free healthcare services.

Which of the following is a characteristic of insurance?

• Coverage for all types of risks without limits.

• No need for premium payments.

• Risk pooling and sharing of financial losses.

• Guaranteed returns on investment.

What type of insurance covers damage to property?

• Auto insurance

• Property insurance

• Life insurance

• Health insurance

Which principle states that the insured must have a legitimate interest in the insured item?

• Risk Assessment

• Insurable Interest

• Moral Hazard

• Premium Calculation

What is the term for the amount paid by the insured for coverage?

• coverage limit

• premium

• deductible

• co-payment

Which type of insurance provides financial protection against medical expenses?

• Auto insurance

• Life insurance

• Homeowners insurance

• Health insurance

What is the principle of indemnity in insurance?

• The principle of indemnity ensures that insurance compensates for actual losses without allowing profit.

• The principle of indemnity allows for profit from insurance claims.

• The principle of indemnity requires full compensation for all potential future losses.

• The principle of indemnity is only applicable to life insurance policies.

Which type of insurance is mandatory for vehicle owners?

• Health insurance

• Comprehensive insurance

• Collision insurance

• Liability insurance

What does the term 'premium' refer to in insurance?

• The amount paid for insurance coverage.

• The total value of insured assets

• A type of insurance policy

• A discount on insurance premiums

Which type of insurance protects against loss of income due to disability?

• Health insurance

• Life insurance

• Disability insurance

• Auto insurance