Question

1. Insurance companies utilize the law of large numbers to reduce the chance of loss for their insureds. true oR FALSE

2.   Which of the following is not a peril?

      a ) car collision

b) vandalism

   c) earthquake

   d) faulty wiring

e) none of the above are correct, on other words: all of the above are perils

3.From an annuitant's perspective, tax deferral is beneficial because :

a) current taxes are increased in return for reduced taxes later

b) money can be invested that would ordinarily be paid in current income taxes

c) tax rates in the future are guaranteed to be lower

d) tax policy varies, there may be no tax on retirement income in the future

Answer 1

Question 1:

Ans: FALSE

The law of large numbers allows the insurer to predict the aggregate dollar losses in advance.

The law says that the larger the sample size (the more exposures pooled together), the more closely the predicted result will equal the actual result.

Question 2:

Ans: d)Faulty wiring

For example a house got fire due to faulty wiring, then here fire is the peril & faulty wiring is the Hazard which caused the risk of fire.

Renters insurance covers cooking fires the same as fires caused by faulty electrical wiring.

Some examples for perils:

• Car collision
• Choking
• Volcano disruptions
• water
• lightning
• Vandalism
• wind

As per policy, we cannot answer multiple individual questions as our answers are monitored by a internal quality team, please post q3 separately for our experts to help.