C02 Core Elements of Insurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on C02 Core Elements of Insurance, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our C02 Core Elements of Insurance MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of C02 Core Elements of Insurance mcq questions that explore various aspects of C02 Core Elements of Insurance problems. Each MCQ is crafted to challenge your understanding of C02 Core Elements of Insurance principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our C02 Core Elements of Insurance MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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C02 Core Elements of Insurance MCQs | Page 4 of 5

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Q31.
What is the fundamental requirement for a risk to be considered insurable according to the law of large numbers?

a.

The loss must be definite and measurable.

b.

The loss must be intentional and controlled by the insured.

c.

A sufficiently large number of homogenously exposed units.

d.

The cost of insurance must be very high.

Discuss
Answer: (c).A sufficiently large number of homogenously exposed units. Explanation:According to the law of large numbers, a fundamental requirement for a risk to be considered insurable is that there must be a sufficiently large number of homogenously exposed units to make the losses reasonably predictable.
Q32.
Why is it important for a loss to be definite and measurable for insurance to make sense?

a.

To deter individuals from making fraudulent claims

b.

To make predictions about the loss and decide compensation

c.

To discourage people from seeking insurance

d.

To reduce the number of insurable risks

Discuss
Answer: (b).To make predictions about the loss and decide compensation Explanation:For insurance to make sense, it is essential for a loss to be definite and measurable, as this allows for predictions about the loss and helps in deciding compensation.
Q33.
What type of event must a loss be associated with to be considered insurable?

a.

A planned and controlled event

b.

An intentional act by the insured

c.

A fortuitous or accidental event

d.

A natural event beyond anyone's control

Discuss
Answer: (c).A fortuitous or accidental event Explanation:To be considered insurable, a loss must be associated with a fortuitous or accidental event, which means it must be the result of an event that may or may not happen and be beyond the control of the insured.
Q34.
What is the economic feasibility criterion for insurability?

a.

The cost of insurance must be low compared to the possible loss.

b.

The cost of insurance must be intentionally high.

c.

The insurer should cover any loss regardless of the cost.

d.

Insurance premiums should always be higher than the possible loss.

Discuss
Answer: (a).The cost of insurance must be low compared to the possible loss. Explanation:The economic feasibility criterion for insurability states that the cost of insurance must not be high in relation to the possible loss; otherwise, insurance would be economically unviable.
Q35.
What is the final criterion for insurability related to public policy and morality?

a.

The contract should not be contrary to public policy and morality.

b.

The contract should favor the insured at all times.

c.

The insurer should prioritize profits over public policy.

d.

The contract should be written in a complex legal language.

Discuss
Answer: (a).The contract should not be contrary to public policy and morality. Explanation:The final criterion for insurability is that the contract should not be contrary to public policy and morality.
Q36.
Which one of the following does not represent an insurable risk?

a.

Fire

b.

Stolen goods

c.

Burglary

d.

Loss of goods due to ship capsizing

Discuss
Answer: (b).Stolen goods Explanation:Stolen goods represent an insurable risk, and they can be covered by insurance policies. Therefore, option b is not the correct choice for a risk that does not represent an insurable risk.
Q37.
Which elements are involved in the process of insurance?

a.

Asset

b.

Risk

c.

Risk pooling

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The process of insurance comprises four elements: asset, risk, risk pooling, and an insurance contract.
Q38.
How is an asset defined in the context of insurance?

a.

Something of no economic value

b.

Anything that causes harm

c.

Anything that confers benefits and has economic value to its owner

d.

A type of hazard

Discuss
Answer: (c).Anything that confers benefits and has economic value to its owner Explanation:An asset, in the context of insurance, is defined as something that confers benefits and has economic value to its owner.
Q39.
What is represented by the term "risk" in insurance?

a.

Certainty of gain

b.

Chance of loss

c.

The asset itself

d.

Insurance premium

Discuss
Answer: (b).Chance of loss Explanation:In insurance, risk refers to the chance of loss.
Q40.
What are hazards in the context of insurance?

a.

Characteristics that decrease the probability of a loss

b.

Conditions that have no impact on risk

c.

Conditions or features that increase the probability of a loss or its severity

d.

Elements of an insurance contract

Discuss
Answer: (c).Conditions or features that increase the probability of a loss or its severity Explanation:Hazards in insurance are conditions or features that increase the probability of a loss or its severity.
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