What is the definition of Risk?
Risk, in insurance terms, refers to something that may happen and will cause a loss on the part of the person or entity that insured against the loss.
Risks may either be looked into based on hazards or perils. Hazards are conditions which add to the possibility of a risk happening or which may worsen its effects. For example, smoking is a hazard that is looked into when evaluating whether to insure a person's life or not. Peril, on the other hand, refers to a potential cause of loss. This are usually characterized by its being unexpected, accidental or outside of the control of the person applying for insurance.
Risk is what insurance policies protect against. Instead of the person bearing the economic consequences when that risk occurs, the insurance company agrees to take on the risk in exchange for premium payments.
| Not a bit | Very useful |
- Risk Management
- Risk Retention Groups
- Risked-Based Capital
- Rollover
- Salvage
- Schedule
- Secondary Market
- Section 1035 Exchange
- Section 415
- Securities and Exchange Commission (SEC)
- Rider
- Revocable Beneficiary
- Return on Equity
- Retrospective Rating
- Retrocession
- Retention
- Residual Market
- Residual Disability
- Residual Disability Insurance
- Reserves