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Questions and Answers
Insurance provides coverage against expected losses or damages in exchange for a premium.
Insurance provides coverage against expected losses or damages in exchange for a premium.
False
Life Insurance covers medical expenses and provides access to medical care.
Life Insurance covers medical expenses and provides access to medical care.
False
The policy limit is the amount the policyholder must pay out-of-pocket before insurance coverage begins.
The policy limit is the amount the policyholder must pay out-of-pocket before insurance coverage begins.
False
Risk Management involves identifying and mitigating potential risks to minimize losses.
Risk Management involves identifying and mitigating potential risks to minimize losses.
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The principle of Utmost Good Faith requires the insurer to disclose all relevant information to the policyholder.
The principle of Utmost Good Faith requires the insurer to disclose all relevant information to the policyholder.
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The principle of Subrogation allows the policyholder to pursue a third party for damages on behalf of the insurer.
The principle of Subrogation allows the policyholder to pursue a third party for damages on behalf of the insurer.
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Study Notes
What is Insurance?
Insurance is a financial protection plan that provides coverage against unexpected losses or damages in exchange for a premium.
Types of Insurance:
- Life Insurance: Provides a financial safety net for family members in the event of death.
- Health Insurance: Covers medical expenses and provides access to medical care.
- Property Insurance: Protects against damage or loss of property, such as homes, cars, or businesses.
- Liability Insurance: Covers damages or injuries to others for which the policyholder is responsible.
- Disability Insurance: Provides income replacement for individuals who become unable to work due to illness or injury.
Key Concepts:
- Premium: The amount paid by the policyholder to maintain coverage.
- Deductible: The amount the policyholder must pay out-of-pocket before insurance coverage begins.
- Policy Limit: The maximum amount the insurance company will pay for a claim.
- Claim: A request for payment by the policyholder for a covered event.
- Risk Management: Identifying and mitigating potential risks to minimize losses.
Insurance Principles:
- Utmost Good Faith: Policyholders must disclose all relevant information to the insurer.
- Indemnity: The insurer restores the policyholder to their pre-loss state.
- Subrogation: The insurer may pursue a third party for damages on behalf of the policyholder.
Insurance Policy Components:
- Declarations: Policy details, including the policyholder's information and coverage details.
- Policy Conditions: Terms and conditions of the policy, including exclusions and limitations.
- Riders: Optional add-ons to customize the policy.
- Exclusions: Specific events or circumstances not covered by the policy.
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Description
Test your understanding of insurance concepts, including types of insurance, key terms, insurance principles, and policy components. Learn about premiums, deductibles, policy limits, and more.
