Question

Question 13  

Tonya purchased a life insurance policy on her own life. Her husband Donald is the beneficiary of the policy. Which of the following is not a necessary legal element of the contract?

	1)Offer and acceptance.
	2)Legal competency of all parties.
	3)Listed beneficiary.
	4)Consideration.

Question 14 

Which of the following statements is/are correct?


1. Insurance companies are concerned with morale hazard as people who have insurance are not as concerned about protecting their own property.


2. Intentional acts of an insured resulting in a loss are generally insurable.

	1)1 Only
	2)2 Only
	3)Both 1 and 2
	4)Neither 1 nor 2

Question 15 

Jason is at home drinking a beer and enjoying his day. The sun begins to go down and he decides to go in for the night. He knows that he left his car unlocked, but decides to not get out of bed and lock the car because he has insurance. This is an example of _______.

	1)Morale Hazard
	2)Moral Hazard
	3)Loss Aversion
	4)Peril-neutral

Question 16 

Dawn has a coin collection worth thousands of dollars. She decides against insuring the coins from theft and will replace them with her own money if they are stolen. Which type of risk management technique is Dawn using?

	1)Risk Reduction
	2)Risk Retention
	3)Risk Transfer
	4)Risk Avoidance

Answer 1

13. Offer and acceptance is not a necessary legal element of the contract since, in life insurnce policy, the spouse can be kept as a nominee.The benefits are paid to beneficiary in case of death of insured.

14.

Insurance companies are concerned with morale hazard as people who have insurance are not as concerned about protecting their own property.This statement is false. The inusred has to be concerned about his property. he has to take care of his property so that it is not damaged. In case it is damaged accidently or as per clause in the insurance contract, the insurer can claim the benefits and insurer can proceed to his fair investigation and reimburse cliaim if insurer is found innocent.

Intentional acts of an insured resulting in a loss are generally insurable. This sttement is false. If the damage is found to be intentional, the insurer can reject the claim as the insured is not following the principle of insurable interest and insurance contract beomes void.

Hence, Neither 1 nor 2 are correct

15. Jason is at home drinking a beer and enjoying his day. The sun begins to go down and he decides to go in for the night. He knows that he left his car unlocked, but decides to not get out of bed and lock the car because he has insurance. This is an example of Morale Hazard.

Circumstance that increases the probability of occurrence of aloss, or a larger than normal loss, because of an insurance-policy applicant's indifferent attitude after the issuance of policy

16.

Dawn has a coin collection worth thousands of dollars. She decides against insuring the coins from theft and will replace them with her own money if they are stolen. Which type of risk management technique is Dawn using risk avoidance

While the complete elimination of all risk is rarely possible, a risk avoidance strategy is designed to deflect as many threats as possible in order to avoid the costly and disruptive consequences of a damaging event. A risk avoidance methodology attempts to minimize vulnerabilities which can pose a threat. Risk avoidance and mitigation can be achieved through policy and procedure, training and education and technology implementations.

I hope the explainations are sufficient. pls let me know if any further doubts.