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Terms in this set (26)In Insurance, a hazard is a... A hazard is any condition or exposure that increases the possibility of loss occurring. Hazards are generally classified as either physical, moral, or morale. Which of the following is not a government insurance program? Medicare - Medicaid - Federal Deposit Insurance Corp - Social Security Federal Deposit Insurance Corporation Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer. Authorized Events or conditions that increase the chances of an insured loss occurring are referred to as... Hazards. Hazards are conditions or situations that increase the probability of an insured loss occurring. What is an aleatory contract? In an aleatory contract, unequal amounts are exchanged between payments and benefits. In this instance, the insured receives a large benefit for a small price. Pure Risk VS Speculative Risk? Pure risk refers to situations that can only result in a loss or no change. There is no opportunity for financial gain. Pure risk is the only type of risk that insurance companies are willing to accept. Speculative risk involves the opportunity for either loss or gain. An example of speculative risk is gambling. These types of risks are not insurable. Which of the following must an insurer obtain in order to transact insurance within a given state? D. Certificate of authority An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the
insurer violated? The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss. The causes of loss insured against in an insurance policy are known
as Perils are the causes of loss insured against in an insurance policy. The authority granted to an agent through the agent's contract is referred to as Express powers are written into the contract between the insurer and the agent. A tornado that destroys property would be an example of which of the following? Peril What are contracts of adhesion? Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis.
What is fiduciary responsibility? Handling insurer funds in a trust capacity. An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? Conditional. A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner. Something of value that is transferred between the two parties to form a legal contract. Consideration The reduction, decrease, or disappearance
of value of the person or property insured in a policy by a peril insured against is known as Loss is the reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against. Courts will interpret any ambiguity in an insurance contract Insurance policies are contracts of adhesion. The insurer writes the contract and the insured accepts the contract as it is written. When ambiguities exist, courts generally rule in favor of the insured. Which services are associated with Standard & Poor's and AM Best? B. Reports generated by Standard & Poor's and AM Best help prospective consumers to judge the financial security of various insurance companies. If an insurer meets the state's financial requirements and is approved to transact
business in the state, it is considered to be C. Authorized. Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer. What is exposure? Exposure is a unit of measure used to determine rates charged for insurance coverage. In life insurance, all of the following factors are considered in determining rates: The age of the insured; What is Concealment? Concealment is the legal term for the intentional withholding of information of a material fact that is crucial in making a decision. In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision. What is a definition of a unilateral contract? C. In a unilateral contract, only one of the parties to the contract is legally bound to do anything. The insured makes no legally binding promises. However, an insurer is legally bound to pay losses covered by a policy in force. A producer who fails to segregate premium monies from his own personal funds is guilty of Commingling What is adverse selection? The insuring of risks that are more prone to losses than the average risk. Poorer risks tend to seek insurance or file claims to a greater extent than better risks. To protect themselves from adverse selection, insurance companies have an option to refuse or restrict coverage for bad risks, or charge them a higher ra What is the Law of Large Numbers? States that the larger a group is, the more accurately losses reported will equal the underlying probability of loss, is the basis for statistical prediction of loss upon which rates for insurance are calculated. In case of a loss, the "indemnity provision" in insurance policies... Restores an insured person to the same financial state as before the loss.
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QUESTION Suppose a firm estimates its WACC to be 10%. Should the WACC be used to evaluate all of its potential projects, even if they vary in risk? If not, what might be “reasonable” costs of capital for average-, high-, and low-risk projects? Verified answer QUESTION Karsted Air Services is now in the final year of a project. The equipment originally cost $29 million, of which 75% has been depreciated. Karsted can sell the used equipment today for$8 million, and its tax rate is 35%. What is the equipment’s after-tax salvage value? Verified answer
QUESTION Over the past year, M.D. Ryngaert & Co. had an increase in its current ratio and a decline in its total assets turnover ratio. However, the company’s sales, cash and equivalents, DSO, and fixed assets turnover ratio remained constant. What balance sheet accounts must have changed to produce the indicated changes? Verified answer
QUESTION Edwards Industries has $320 million in sales. The company expects that its sales will increase 12% this year. Edwards’ CFO uses a simple linear regression to forecast the company’s receivables level for a given level of projected sales. On the basis of recent history, the estimated relationship between receivables and sales (in millions of dollars) is as follows: Receivables=$9.25+0.07(Sales). Given the estimated sales forecast and the estimated relationship between receivables and sales, what are your forecasts of the company’s year-end balance for receivables and its year-end days sales outstanding (DSO) ratio? Assume that DSO is calculated on the basis of a 365-day year. Verified answer Other Quizlet setsWorld History UNIT 7: ABSOLUTISM AND THE RISING TI…120 terms quizlette4412436 Sociology Quiz Questions Final17 terms jessicabaker22 LUMBAR SPINE / SACRUM / COCCYX ANATOMY A…75 terms tangelosanto Chapter 419 terms sydney_dumond7PLUS Related questionsQUESTION the dwelling and other structures are written on an open perils basis 6 answers QUESTION an insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. what organization can help the insurer accomplish this ? 15 answers QUESTION What is the coverage of the "basic extended reporting period" in a claims-made policy? 7 answers QUESTION (1) associated with diseases inherited (Ch 9); (2) one who carries, transports; with insurance, it's the company that provides the policy (Ch 27, 28, 30). 3 answers What four requirements must be met to form a binding insurance contract?In general, an insurance contract must meet four conditions in order to be legally valid: it must be for a legal purpose; the parties must have a legal capacity to contract; there must be evidence of a meeting of minds between the insurer and the insured; and there must be a payment or consideration.
What must an insurer have to be admitted quizlet?What must an insurer have to be admitted? Admitted, or authorized, insurers must have a certificate of authority to transact insurance in a particular state.
What is the authority granted to an agent through the agents contract?Express authority is the authority that an agent has in writing in the contract with the insurer that the agent represents. Express authority spells out in contract form the activities that the agent has the power to perform on behalf of the insurer.
What is included in the formation of an insurance policy?For an insurance contract, as with any contract, there must be agreement between the parties on the principal terms, 2 which would presumably include the risk to be covered, the insured subject-matter, the duration of the cover, the premium and the benefit due in the event of a covered loss.
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What must an insurer obtain in order to transact insurance within a given state?
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