Question 1

Insurance is a risk management technique involving____________

Accepted Answer

Insurance is a method of risk transfer, where the financial responsibility for losses is shifted from the insured to the insurer.

Question 2

Risk management follows a systematic process which involves _______ steps.

Accepted Answer

Risk management typically follows a systematic process that involves five key steps: identify the risks, analyze the risks, evaluate or rank the risks, treat the risks, and monitor and review the situation.

Question 3

Organizations are mainly concerned with managing

Accepted Answer

Organizations are mainly concerned with managing pure risks, which are types of risks that involve only the possibility of loss or no loss, such as natural disasters or accidents. These risks can be insured against, unlike speculative risks which involve the possibility of gain as well as loss.

Question 4

The first step in risk management process is

Accepted Answer

The first step in the risk management process is risk identification. This involves recognizing and documenting the potential risks that could affect a project, process, or endeavor. Only after risks are identified can they be analyzed, evaluated, and managed appropriately.

Question 5

Which of the following steps in the risk management process helps in determining sum insured under policies?

Accepted Answer

Risk evaluation helps in determining the sum insured under policies by assessing the potential impact and likelihood of identified risks, thereby aiding in deciding the appropriate level of coverage needed.

Question 6

Main emphasis of risk management is on

Accepted Answer

The main emphasis of risk management is on the reduction of the cost of handling risk, aiming to minimize the impact of risks on an organization's financial health and operational stability.

Question 7

The Concept of Insurance is ___________

Accepted Answer

The concept of insurance is fundamentally about distributing or sharing the financial risk of losses among many people or entities to protect against significant, individual losses.

Question 8

Insurance covers the risk of most certain event _____

Accepted Answer

Insurance primarily covers events that have a degree of uncertainty regarding their timing or occurrence. While death is a certain event for everyone, the timing of death is uncertain, making it insurable. Birth, childhood, and old age are stages of life that, while they can be associated with specific insurance products for protection, do not represent the same level of insurable risk as the uncertainty of the timing of death.

Question 9

Insurance cover _______

Accepted Answer

The answer of Insurance cover _______
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Question 10

The proportion of the risk which the direct insurer holds on his own account refers to _______

Accepted Answer

Retention refers to the portion of risk that an insurer keeps for itself instead of transferring it to a reinsurer or another party. It indicates the level of risk the insurer is willing to accept and manage on its own account.

Question 11

The business of insurance is related to protection of ________

Accepted Answer

Insurance is fundamentally about protecting the economic value of assets. It provides financial protection or reimbursement against losses to an individual or entity.

Question 12

Who are the beneficiaries of Insurance?

Accepted Answer

Insurance benefits society by reducing the financial burden of risks, individuals by providing financial protection, and businesses by safeguarding against potential losses.

Question 13

In insurance contracts, the insurance company is also known as ________

Accepted Answer

The insurance company is referred to as the "Insurer" in insurance contracts, as they provide the insurance coverage.

Question 14

For introduction of a group scheme, we need a ______

Accepted Answer

A group scheme typically requires a homogeneous group to ensure that the risks are similar across the group, making it easier to manage and underwrite.

Question 15

When choosing group life insurance, most groups buy _______

Accepted Answer

Most groups opt for one year renewable group term assurance when choosing group life insurance because it is cost-effective and flexible, allowing for yearly adjustments based on the group's changing needs and demographics.

Question 16

On the death of the bread-earner, two losses occur in the family-one is loss of human life and the other _____

Accepted Answer

The other loss that occurs in the family upon the death of the bread-earner is the loss of earning power of the family. This impacts the family's financial stability and ability to maintain their standard of living.

Quiz 4: Understanding Insurance: Cover, Risk, and Reinsurance