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The Principles of Underwriting
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Flashcards
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Deductible
The amount that a policyholder must pay out of pocket before the insurer pays a claim.
Risk Assessment
The process of determining the level of risk associated with an applicant or entity.
Mortality Table
A statistical table showing the rate of death at each age in terms of the number of deaths per thousand.
Underwriter
A professional who evaluates and analyzes the risks involved in insuring people or assets and establishes appropriate premium and coverage amounts.
Moral Hazard
The tendency of a person to take more risks because they are insured, thus affecting the likelihood of a claim.
Underwriting Profit
The difference between the premiums earned and the expenses and claims paid out.
Adverse Selection
A situation where the insurer is faced with the probability of loss due to risk not factored in at the time of sale.
Actuary
A financial expert who applies statistical and mathematical methods to assess risk in the insurance and finance industries.
Exclusion
A policy provision that eliminates coverage for certain risks, people, property classes, or locations.
Premium
The amount of money charged by an insurer to provide coverage under a policy for a certain period of time.
Limit of Liability
The maximum amount an insurer will pay for a covered loss.
Reinsurance
The practice where an insurer transfers a portion of the potential financial risk to another insurer to lower the chance of paying a large obligation resulting from an insurance claim.
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