Insurance - Study Mode

[#381] Risk Financing includes -
Correct Answer

(C) A & B correct

Explanation

Solution: In business economics, risk financing is concerned with providing funds to cover the financial effect of unexpected losses experienced by a firm. Traditional forms of finance include risk transfer, funded retention by way of reserves (often called self-insurance) and risk pooling.

[#382] Risk Retention means
Correct Answer

(D) Self-insurance

Explanation

Solution: Risk Retention means Self-insurance. In other words the retention of risk means one is liable to bear the losses himself up to the amount retained.

[#383] Insurance refers to protection against an event that _________ happen whereas Assurance refers to protection against an event that _________ happen.
Correct Answer

(B) Might, will

Explanation

Solution: Insurance refers to protection against an event that might happen whereas Assurance refers to protection against an event that will happen.

[#384] Which of the following is not a traditional type of product offered by insurance companies?
Correct Answer

(D) ULIP

Explanation

Solution: ULIP is a life insurance product which provides risk cover for the policy holder along with investment options to invest in any number of qualified investments such as stocks, bonds or mutual funds.

[#385] Which of the following is incorrect with regards to portfolio method?
Correct Answer

(D) None of the above

Explanation

Solution: All of the above are correct with regards to the portfolio method. The portfolio method is an accounting method that credits all funds on the specified current rate of interest, regardless of when the money was placed in the account.