Pure and Speculative Risks in Insurance
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Questions and Answers

Which type of risk is characterized by a potential gain as one of the outcomes?

  • Non-diversifiable risk
  • Diversifiable risk
  • Speculative risk (correct)
  • Pure risk
  • What type of risk is associated with a person's income being reduced or additional expenses being incurred?

  • Longevity risk
  • Risk of unemployment
  • Risk of premature death
  • Personal risk (correct)
  • Which of the following risks is an example of a more serious risk that could lead to permanent disability or death?

  • Risk of fever
  • Risk of unemployment
  • Risk of illness (correct)
  • Risk of poor health
  • What type of risk is characterized by a loss of income due to the death of a breadwinner?

    <p>Risk of premature death</p> Signup and view all the answers

    Which of the following risks is not a type of personal risk?

    <p>Non-diversifiable risk</p> Signup and view all the answers

    Which of the following risks is an example of a risk that can be mitigated through insurance?

    <p>Risk of premature death</p> Signup and view all the answers

    What is the primary consequence of a firm experiencing losses due to any of the identified perils?

    <p>A substantial reduction in the value of the firm</p> Signup and view all the answers

    What is the term for the risk of a firm being sued by a third party?

    <p>Liability risk</p> Signup and view all the answers

    Which type of risk is illustrated in the example of a customer slipping and falling in a business premises?

    <p>Liability risk</p> Signup and view all the answers

    What is the primary consequence of a manufacturing firm experiencing a fire in its plant?

    <p>A decline in sales and loss of market share</p> Signup and view all the answers

    What is the term for the risk of injury or illness to employees or death or disability to key persons in a business?

    <p>Human resource risk</p> Signup and view all the answers

    Which type of risk is illustrated in the example of theft by employees or misuse of company funds by owners or employees?

    <p>Crime risk</p> Signup and view all the answers

    What is the main consequence of a factory's inability to operate as usual?

    <p>Disruption in production, sales and normal profits</p> Signup and view all the answers

    What is the peril in the case of a fireman sustaining burns while on duty?

    <p>The fire that caused the burns</p> Signup and view all the answers

    What type of hazard is a worn out tire on a car?

    <p>Physical hazard</p> Signup and view all the answers

    What is an example of moral hazard?

    <p>Faking death to claim from life insurance</p> Signup and view all the answers

    What is the primary goal of loss prevention?

    <p>To eliminate the risk of a loss</p> Signup and view all the answers

    What type of hazard is an individual's careless attitude that increases the severity or frequency of a loss?

    <p>Morale hazard</p> Signup and view all the answers

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