QUESTION Does health insurance involve pure risk or speculative risk for the insured? Explain. What will be an ideal response? ANSWER Answer: Health insurance involves pure risk for the insured. Pure risk involves a chance for either loss or no loss; there is no possibility of gain. The insured pay their premiums whether they […]
QUESTION Which of the following is a situation for which insurance will cover you? A) Marcy is not sure she is going to like her new job, but she cannot survive financially if she doesn’t keep it. She wants to buy salary insurance in the event she wants to quit the job. B) Electronics R […]
QUESTION Which of the following is an example of transaction offered by a stock insurance company? A) Anita got a dividend check in the mail from her auto insurance company. B) Albert was assessed a fee by his homeowner’s policy because the insurance company suffered losses this year. C) Hal’s insurance company did so well […]
QUESTION What is the name for the professional liability insurance doctors and dentists carry? Give an example of a situation that would make use of such insurance. What will be an ideal response? ANSWER Answer: Doctors and dentists carry malpractice insurance. Sample example: A dentist who removed a healthy tooth instead of the rotten […]
QUESTION Which of the following is an example of automobile crash protection? A) thermal imaging cameras that enhance drivers’ ability to distinguish objects at night B) cruise controls with a radar sensor that adjusts the distance between you and the car in front of you C) lane departure warning systems such as rumble strip sounds […]
QUESTION Which of the following is an example of risk reduction? A) If Samuel’s cell phone rings when Samuel is driving, Samuel finds a safe place to pull off the road and calls the caller back. B) Ashley had not been scuba diving in a few years, so when her friends decided to go on […]
QUESTION Which of the following is an example of “going bare”? A) Enrique owns a small recording studio. Despite its size, the studio contains thousands of dollars’ worth of equipment. Enrique has chosen to transfer his risk. B) Hetty owns a small nail salon and the building it is in. Because she perceives the risks […]
QUESTION Which situation is NOT insurable? A) Rita wants to be sure to insure her new riverside cottage from flood damage. B) Trevor wants to purchase hurricane insurance to cover the spectacular ocean view he has from his new home. C) Chad wants to be sure his cattle barns in Kansas are covered in the […]
QUESTION Which situation is insurable? A) Eileen wants to insure her sister’s house against termite damage. B) Billy wants to help his father by holding the workers’ accident insurance for his father’s steel working company. C) Robert wants to take out a policy to protect his nephew’s store from theft. D) Maxine wants to insure […]
QUESTION Which of the following is NOT an insurer’s requirement for coverage? A) The policyholder must have an insurable interest. B) The loss should be accidental. C) The loss should be very great. D) The insurer is able to spread the risk widely. E) The loss must be measurable. ANSWER Answer: C Explanation: C) […]
