Basic Principals of Life and Health Insurance

Question 1

This is the department within an insurance company that’s responsible for reviewing applications, approving or declining applications, and assigning risk classifications.

Answer 1

Underwriting Department

Question 2

This is a non-admitted insurer.

Answer 2

Unauthorized Insurer

Question 3

This is non-traditional insurance that provides coverage for substandard or unusual risks and is not available through private or commercial carriers.

Answer 3

Surplus Lines Insurance

Question 4

This is an insurance company that’s owned and controlled by a group of shareholders whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies.

Answer 4

Stock Insurance Company

Question 5

These are the individuals who solicit and schedule sales meetings between consumers and the producers for whom they work. Some states separately license these individuals.

Answer 5

Solicitors

Question 6

These are customer service employees. They are not required to obtain a license because they neither sell nor solicit coverage, and they don’t bind coverage.

Answer 6

Service Representatives

Question 7

This is a company that establishes a self-funded plan to cover potential losses rather than transferring the risk to an insurance company.

Answer 7

Self-Insurer

Question 8

This department acquires clients through one-on-one meetings in which consumers complete applications.

Answer 8

Sales Department

Question 9

This is the person who’s responsible for the payment of premiums and who possesses all ownership rights of the contract. Typically, the y are also the insured.

Answer 9

Policy owner

Question 10

This is an insurer that’s owned by private citizens or groups that offer one or more insurance lines. They are NOT government-owned.

Answer 10

Private (Commercial) Insurer

Question 11

This is an individual who’s licensed by one or more states to sell, solicit, or transact insurance in a given state.

Answer 11

Producer

Question 12

This is the person whose life will be covered by an insurance policy.

Answer 12

Proposed Insured

Question 13

This person acts on behalf of a consumer who’s settling an insurance claim.

Answer 13

Public Adjuster

Question 14

This is an unincorporated organization in which all members insure one another. An attorney-in-fact manages it.

Answer 14

Reciprocal Insurer

Question 15

This is the acceptance by one or more insurers of a portion of the risk being underwritten by another insurer that has contracted with a consumer to cover the entire risk.

Answer 15

Reinsurance

Question 16

This is a company that provides financial protection to insurance companies. They handle risks that are too large for insurance companies to cover on their own and make it possible for insurers to obtain more business than they would otherwise be able to obtain

Answer 16

Reinsurer

Question 17

This is a group-owned liability insurer that assumes and spreads product liability and other forms of commercial liability risks among its members.

Answer 17

Risk Retention Group

Question 18

This is an agency that represents one or more specific insurers. A (Blank) is a similar agency system, they don’t recruit, train, or supervise career agents.

Answer 18

Personal Producing General Agency (PPGA)

Question 19

This is an insurance policy that pays policy dividends to policy owners. By receiving dividends, policy owners share in the company’s divisible surplus and also elect the company’s board of directors.

Answer 19

Participating Policy

Question 20

This is an insurance company that’s characterized by having no capital stock, being owned by their policy owners, and typically issuing participating insurance.

Answer 20

Mutual Insurance Company

Question 20

This is a policy that’s typically issued by stock companies. This type of policy doesn’t allow policy owners to participate in dividends or to elect the board of directors.

Answer 20

Nonparticipating Policy

Question 21

This is an insurer that has not received a certificate of authority from a state’s department of insurance which authorizes it to conduct insurance business in that state.

Answer 21

Non-Admitted (Unauthorized) Insurer

Question 22

This is an insurance company or independent agent that provides a “one-stop-shop” for businesses or individuals who are seeking coverage for all of their insurance needs. For example, many large insurers offer individual policies for automobile, homeowner, long-term care, life, and health insurance needs.

Answer 22

Multi-Line Insurer

Question 23

This is an insurance carrier that only sells one line of insurance

Answer 23

Monoline Insurer

Question 24

This is the division that’s responsible for acquiring prospective applicants through various advertising media.

Answer 24

Marketing Division

Question 25

This is an agency that any number of insurance companies through contractual agreements.

Answer 25

Independent Insurance Agency

Question 25

This is the transfer of risk through the pooling or accumulation of funds.

Answer 25

Insurance

Question 26

This is the customer who receives insurance protection under an insurance policy.

Answer 26

Insured

Question 27

This is an insurance company

Answer 27

Insurer

Question 28

This is NOT an insurer but a group of individuals and companies that underwrite unusual insurance policies.

Answer 28

Lloyds of London

Question 29

This is a non-profit benevolent organization that provides insurance to its members.

Answer 29

Fraternal Benefit Society

Question 30

This is an insurer whose principal office or domicile location is in a state that’s different from the state in which it’s transacting insurance business.

Answer 30

Foreign Insurer

Question 31

This is an insurer with its principal or home office in the state in which it’s authorized.

Answer 31

Domestic Insurer

Question 32

This is the amount of earnings that are paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.

Answer 32

Divisible Surplus

Question 33

This is the department that’s responsible for processing, investigating, and paying claims

Answer 33

Claims Department

Question 34

This is a license that’s issued to an insurer by an insurance department (or equivalent state agency) that authorizes that company to conduct insurance business in that particular state.

Answer 34

Certificate of Authority

Question 35

This is an insurer that’s established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.

Answer 35

Captive Insurer

Question 36

This is a person who represents himself and the insured (i.e., the client or customer). They cannot bind coverage on behalf of an insurance carrier because they are not appointed as an agent.

Answer 36

Broker

Question 37

This is an admitted insurer.

Answer 37

Authorized Insurer

Question 38

This is an individual or organization that’s authorized to solicit, sell, and transact (bind) coverage for specific insurance providers under the terms of one or more agent contracts.

Answer 38

Agent

Question 39

This is an insurer who has received a certificate of authority from a state’s department of insurance which authorizes them to conduct insurance business in that state.

Answer 39

Admitted Insurer

Question 40

In the United States, this is an insurer whose principal office and domicile location is outside this country.

Answer 40

Alien Insurer

Question 41

This is the person who investigates claims and arranges for them to be settled or denied.

Answer 41

Adjuster

Question 42

This is the department that calculates policy rates, reserves, and dividends.

Answer 42

Actuarial Department