3.14.20 Flashcards
policyowner
the person entitled to exercise the righrts and privileges int the policy
pays premiumn to the insurance company
insurer (principal)
the company who issues an insurance policy
issues policy to the policy owner
pays benefit to beneficiary
two kinds of risk
pure and speculative
pure
loss
speculative
gain or loss
adverse selection
insuring of risks that are more prone to losses than the average risk
law of large numbers
want more people so that there’s a larger pool of people to split costs between
agent/producer
a legal rep of an insurance company, agents or broker
insurance is really just…
a transfer of risk.
beneficiary
received benefit upon insured’s (policy owner) death
insurable interest must only exist…
at the time of application
insurable interest
the possibility of losing money or something of value in the event of loss
4 elements of a legal contract
agreement
consideration
competent parties
legal purpose
agreement
offer and acceptance
consideration
applicant - representations and premium
competent parties
legal age
mentally competent
not under the influence of drugs and alcohol
legal purpose
not against public policy
difference between warranty + representation
warranty - undeniably true
rep - not guaranteed to be true
misrep - accidentally not true
solicitation of insurance
an attempt to persuade a person to buy an insurance policy
how to make correction on application
one line through, insured’s initials, new answer
difference between premium receipt and conditional receipt
when policy is made
premium receipt - when it is issued with the application
conditional receipt - letting them know this is based on if we do it exactly as applied for, we will backdate
conditional receipt
says that coverage will be effective either on the date of the application or the date of the medical exam, whiever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for
bond
$2,500 or 5% of the premiums brokered in the previous year, whiever is greater, but not to exceed 50,000 dollars total aggregiate liberty
misrepresentation
false, misleading, or deceptive statements about policy terms or benefits
rebating
offering benefits or services not specified in the policy
defamation
maliciously critical statements about a person or company
false advertising
untrue, deceptive, or misleading statements in insurance advertising
twisting
misleading comparison of policies to persuade insured to cancel or switch policies
unfair discrimination
discrimination in rates, premiums, or benefits
advertising
any type of communication intende to create interest in life insurance, an insurer, or to induce someone to buy, change, or retain an insurance policy
an illustration is a
presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of time
credit life
exempt from all the laws
suitability
age income and existing assets financial situation, experience objective net worth tax status risk tolerance
provisions
define the characteristics of an insurance contract and are fairly universal from one policy to the next
riders
are added to a pplicy to modify provisions that already exist, and they cost extra
options
offer insurers and insureds ways to invest or distribute a sum of money available in a life policy
consideration
something of value that each party gives to the other (binding force in any contract)
indemnity
a principle of reimbursement on which insurance is based; in the event of loss, an insurer reimburses the insureds or beneiciaries for the loss
lump sum
payment of the entire benefit in one sum
minor
a person under legal age
principal
the face value of the policy; the original amount invested before the earnings
NAIC
National Association of Insurance Commisioners, an organization composed of insurance Commissioners from all states and jurisdictions formed to resolve insurance regulatory issues
principal
the face value of the policy; the original amount invested before the earnings
ownership rights
name and change the beneficiary
right to the policy cash value, dividends, and loans
select settlement options
assign the policy
who has ownership rights
the policyowner
2 ways assignment can happen (giving away policyowner rights)
absolute - all rights of ownership, permanent, eg Life Policy on a spouse
collateral - partial rights, temporary, eg credit insurance
reinstatement
policy lapses, restoring it
how to reinstate
apply within the maximum time limit
provide proof of insurability
pay all back premiums plus interest
repay outstanding loans plus interest
incontestability
prevents an insurer from denying a claim due to the statements in the application after the policy has been in force for 2 years
exclusions
types of risks the policy will not cover
types of exclusions
W - war and military service
A - aviation (amateur pilots)
S - suicide
H - hazardous occupations or hobbies
suicide
2 years - premiums paid
after 2 years - full death benefit
3 categories of riders
disability
affect disability amount
covering additional insured
