Question

1. Insurance will cover which one of the Following Risk.??(A)Speculative (B)Unemployment(C)Particular(D)Fundamental

2. A couple decides to go bungee jumping. After going through the training to take jump one person backs out. This is a result of..??(A)Low subjective risk (B)High subjective risk(C)Morale Hazard(D)Criminal Risk.

3.I purchase A home next to a river that flooded many years ago.I am exposed to what kind of risk..??(A)Peril(B)Speculative(C)Particular(D)Fundamental.

4.An insurance company checks credit score and motor vehicle report of an application for insurance.What they are trying to measure.??(A)peril(B)Fundamental risk(C)Objective risk(D)Subjective risk.

Answer 1

Only pure risks are insurable because they involve only the chance of loss.They are pure in the sense that they do not mix both profits and losses.Speculative risks are not insurable,since it involve the possibility of loss and gain.

Pure risk iclude unemployment risk,thus insurance will cover the unemployment risk.

Particular risk and fundamental risks are also insurable.The difference between the fundamental risk and Particular risk is that fundamental risk are non discrimantory in its affect and effect,while particular risks affects only an individual and not everybody in the community.

Accordingly,the correct answer is Option B,C and D