Risks in insurance terminology refers to
The uncertainty of financial loss
Hazards
Conditions that increase the chances of an insured loss occurring are referred to as
Date of Application
When must insurable interest exist in life insurance
Utmost good faith
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. in the forming of an insurance contract, this is referred to as
Risk Retention
Self -insurance, Deductibles, Copayments
Transfer
Method of dealing with risk is applied when a person purchases insurance
Indemnity
A provision that states that if a policy allows for greater compensation than the financial loss incurred the insured may only receive benefits for the amount loss
Examples of Hazards
Physical, Moral, Morale
Human Life Approach
A method of calculating the amount of life insurance needed takes into the insured's salary and years until retirement
The owner of a shop
would not be eligible for coverage under key person insurance
Consideration (insurance contract)
Exchange of something of value by both parties
Warranty (insurance contract)
Statement believed to be true
Offer and Acceptance , Competent Parties and Consideration
All of the following elements need to included in an insurance contract to be considered legally binding
Intentional and Material
is when a misrepresentation on the insurance application which is considered fraud
Agent
acts on behalf of the principal
Exchange of Unequal values
best describes the Aleatory nature of an insurance contract
Must be identified in an insurance policy
Stated periodic premiums, Statement of insurable interest , and the first name insured.
Rate
The price of insurance for each unit of exposure
Negligence
an unintentional tort
Insurable Interest and Consent
when both exist a life insurance policy has a legal purpose