Loma 281 Module 1 Study Guide Exam Questions With Answers 100% Verified 2024

Mortality tables {Ans: A chart that shows the mortality rates an insurer may reasonable anticipate among a particular group of insured lives at certain ages.}Retention limit {Ans: The maximum amount of insurance that an insurer is willing to carry at its own risk on any one life. The direct writer cedes anything above that limit to a reinsurer in a reinsurance transaction or through other risk transfer mechanisms.}Premium {Ans: A specified amount of money an insurer charges in exchange for its agreement to pay a policy benefit when a specific loss occurs.}Law of large numbers {Ans: A theory of probability which states that, typically, the more times we observe a particular event, the more likely it is that our observed results will approximate the 'true' probability that the event will occur.}Insurance company {Ans: A company that provides protection against the risk of financial loss caused by specific events.}Lapse {Ans: The termination of coverage under an insurance policy when the renewal premium has not been paid on time.}Direct writer {Ans: AKA ceding company; In a reinsurance transaction, the insurance company that purchases reinsurance.}Reinsurer {Ans: In a reinsurance transaction, the company that provides reinsurance