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Insurance > Basic Principles -1 > Flashcards

Basic Principles -1 Flashcards

1
Q

Types of insurance

A

Commercial insurers
Stock companies
Mutual companies

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2
Q

Commercial insurers are also known as?

A

Private insurance companies

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3
Q

An insurance company selling more than one line for of insurance is known as

A

Multi-line insurer

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4
Q

Commercial insurers(private insurance companies) are in the business of

A

Selling insurance for a profit

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5
Q

Stock companies

A

Organized and incorporated under state laws to make profit for their stockholders

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6
Q

Stock insurers are also called

A

Nonparticipating insurers

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7
Q

Stock insurers are called Nonparticipating insurers because

A

Policyholders do not participate in recieving dividends or electing board of directors

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8
Q

Mutual companies are owned by?

A

Policyholders

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9
Q

Mutual insurers are also known as

A

Participating insurers

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10
Q

Mutual insurers are known as participating insurers because

A

Policyholders participate in receiving dividends and electing the board of directors

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11
Q

If a company operates as both a participating and nonparticipating insurer they are known as a

A

Mixed insurer

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12
Q

Dividends can never

A

Be guaranteed regardless of the type of company offering them

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13
Q

Strong assessment mutual companies are classified by what

A

The way they charge premium

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14
Q

A pure assessment mutual company (PAMC)

A
  • Operates based on loss sharing by group members
  • no premium can be paid in advance
  • each member assessed portion of losses that occur
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15
Q

An advance premium assessment mutual (APAM)

A
  • Charges premium at beginning of policy period
  • if original premiums exceed the expenses and losses the extra is returned to policyholders as dividends if no extra then it’s levied against policyholders
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16
Q

Fraternal benefit societies are special types of what and for what group do they raise the money for

A 
Mutual companies
-nonprofit religious 
-ethnic 
-charitable organizations
—provide insurance only to their members
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17
Q

Risk retention groups are

A

Mutual companies formed by a group of people in the same industry or profession

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18
Q

Service providers do what

A

Offer benefits to subscribers in return for the payment of a premium
-they are packed into various plans

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19
Q

Reciprocal insurers are

A

Unincorporated groups of people that provide insurance for other members through indemnity contracts

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20
Q

Reinsurers do what

A

They are the insurance for other insurances

They transfer risk

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21
Q

Ceding company is

A

The company transferring the risk

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22
Q

The company assuming the risk is the

A

Reinsurer

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23
Q

Primary insurer in a reinsurance agreement is

A

The insurance company that transfers it’s loss exposure to another insurer

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24
Q

Captive insurer is

A

An insurer established and owned by the parent company to insure the parent company’s loss exposure

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25
Home service insurers also known as
Industrial insurance
26
Home service insurers is sold by
home service or debit life insurance companies
27
Government insurance include
- Social security - Medicare - Medicaid - SGLI and VGLI - Tri-Care
28
Social security provides
Income benefits for the elderly, survivors of those who died young, and those qualifying for federal disability
29
Medicare provides
Health insurance to care for the elderly
30
Medicaid provides
Health Insurance to aid the financially needy
31
SGLI and VGLI provide
Life insurance for active and retired members of the military
32
Tri-Care provides
Health insurance for members of the military and their family
33
Self insurers do what
Retain risks and must have a large number of them and enough capital to pay claims
34
Self funded plan is
A plan in which an employer pays insurance benefits from a fund derived from the employers current revenues
35
How insurance is sold:the systems
- Distribution systems - Career agency system - Personal producing general agency system - independent agency system - managerial system - mass marketing
36
Distribution systems are
The ways Insurance products are marketed and sold to the public
37
The career agency system can
Establish offices in certain locations
38
Personal producing general agency system
Agents work for an independent agency selling policies from several insurance companies
39
Independent agency system is also known as
American agency system
40
Independent agency system
Independent agents represent a Number of insurance companies under separate contractual agreements
41
Managerial system
Branch offices are established in several locations | A salaried branch manager is employed by the insurer
42
Mass marketing is
Another way to sell insurance | Can use direct selling through ads
43
1869 Paul vs Virginia
The US Supreme Court ruled that insurance transactions crossing state lines are not interstate commerce
44
1905 the Armstrong investigation act
Gave the authority to the states to regulate insurance
45
1944 United States V south eastern underwriters association
Ruled that insurance transactions crossing state lines are interstate commerce and are subject to federal regulation
46
1945 McCarran Ferguson act
States that while the federal government has authority to regulate the insurance industry, if it was controlled adequately on the state level they would not interfere
47
1970 fair credit reporting act
Provides individuals privacy protection and fair and accurate credit reporting
48
1999 Graham Leach Bliley act
Repealed the glass-Steagall act this allows the banks, retail brokerages, and insurance companies to enter each other’s lines of business
49
2001 USA patriot act
Is designed to detect and deter terrorists and their funding by imposing anti-money laundering requirements on brokerage firms and financial institutions
50
2003 national do not call registry
Insurance calls are not exempt from the do not call registry
51
2010 patient protection and affordable care act
Represents one of the most significant regulatory overalls and expansions of coverage in US history
52
National Association of insurance commissioners
Organization composed of insurance commissioners for all 50 states -they are responsible for recommending appropriate laws and regulations
53
National Association of insurance commissioners are responsible for the creation of
- Advertising code | - the unfair trade practices act -Medicare supplement insurance minimum standard model act
54
The NAIC has 4 objectives
- to encourage uniformity in state insurance laws and regulations - To assist in the administration of those laws and regulations by promoting efficiency - To protect the interest of policy owners and consumers - To preserve state regulation of the insurance business
55
Advertising code
Specifies a certain words and phrases that are considered misleading and are not to be used in advertising of any kind
56
Unfair trade practices act
Gives chief financial officer the power to investigate insurance companies and producers to impose penalties
57
NAIFA and NAHU members are
life and health agents
58
To sell insurance you must have these standards and ethics
- Selling to needs - suitability of recommended products - Full and accurate disclosure - documentation - Client services
59
Buyers guide
Explains various types of life insurance products and other information on the recommended policy such as premiums dividends and benefit amounts
60
Policy summary
Help consumers evaluate the suitability of the recommended product
61
Reserves
Are the accounting measurement of an insures future obligations to its policyholders
62
Liquidity
An insurers ability to make unpredictable payouts to policy owners
63
Guaranty associations
Are established by all states to support insurers and protect consumers in case an insurer becomes insolvent
64
Independent rating services
Our credit rating agencies that rate or grade the financial strength and stability

Insurance (13 decks)

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