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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
Q

Home service insurers also known as

A

Industrial insurance

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26
Q

Home service insurers is sold by

A

home service or debit life insurance companies

27
Q

Government insurance include

A
  • Social security
  • Medicare
  • Medicaid
  • SGLI and VGLI
  • Tri-Care
28
Q

Social security provides

A

Income benefits for the elderly, survivors of those who died young, and those qualifying for federal disability

29
Q

Medicare provides

A

Health insurance to care for the elderly

30
Q

Medicaid provides

A

Health Insurance to aid the financially needy

31
Q

SGLI and VGLI provide

A

Life insurance for active and retired members of the military

32
Q

Tri-Care provides

A

Health insurance for members of the military and their family

33
Q

Self insurers do what

A

Retain risks and must have a large number of them and enough capital to pay claims

34
Q

Self funded plan is

A

A plan in which an employer pays insurance benefits from a fund derived from the employers current revenues

35
Q

How insurance is sold:the systems

A
  • Distribution systems
  • Career agency system
  • Personal producing general agency system
  • independent agency system
  • managerial system
  • mass marketing
36
Q

Distribution systems are

A

The ways Insurance products are marketed and sold to the public

37
Q

The career agency system can

A

Establish offices in certain locations

38
Q

Personal producing general agency system

A

Agents work for an independent agency selling policies from several insurance companies

39
Q

Independent agency system is also known as

A

American agency system

40
Q

Independent agency system

A

Independent agents represent a Number of insurance companies under separate contractual agreements

41
Q

Managerial system

A

Branch offices are established in several locations

A salaried branch manager is employed by the insurer

42
Q

Mass marketing is

A

Another way to sell insurance

Can use direct selling through ads

43
Q

1869 Paul vs Virginia

A

The US Supreme Court ruled that insurance transactions crossing state lines are not interstate commerce

44
Q

1905 the Armstrong investigation act

A

Gave the authority to the states to regulate insurance

45
Q

1944 United States V south eastern underwriters association

A

Ruled that insurance transactions crossing state lines are interstate commerce and are subject to federal regulation

46
Q

1945 McCarran Ferguson act

A

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
Q

1970 fair credit reporting act

A

Provides individuals privacy protection and fair and accurate credit reporting

48
Q

1999 Graham Leach Bliley act

A

Repealed the glass-Steagall act this allows the banks, retail brokerages, and insurance companies to enter each other’s lines of business

49
Q

2001 USA patriot act

A

Is designed to detect and deter terrorists and their funding by imposing anti-money laundering requirements on brokerage firms and financial institutions

50
Q

2003 national do not call registry

A

Insurance calls are not exempt from the do not call registry

51
Q

2010 patient protection and affordable care act

A

Represents one of the most significant regulatory overalls and expansions of coverage in US history

52
Q

National Association of insurance commissioners

A

Organization composed of insurance commissioners for all 50 states
-they are responsible for recommending appropriate laws and regulations

53
Q

National Association of insurance commissioners are responsible for the creation of

A
  • Advertising code

- the unfair trade practices act -Medicare supplement insurance minimum standard model act

54
Q

The NAIC has 4 objectives

A
  • 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
Q

Advertising code

A

Specifies a certain words and phrases that are considered misleading and are not to be used in advertising of any kind

56
Q

Unfair trade practices act

A

Gives chief financial officer the power to investigate insurance companies and producers to impose penalties

57
Q

NAIFA and NAHU members are

A

life and health agents

58
Q

To sell insurance you must have these standards and ethics

A
  • Selling to needs
  • suitability of recommended products
  • Full and accurate disclosure
  • documentation
  • Client services
59
Q

Buyers guide

A

Explains various types of life insurance products and other information on the recommended policy such as premiums dividends and benefit amounts

60
Q

Policy summary

A

Help consumers evaluate the suitability of the recommended product

61
Q

Reserves

A

Are the accounting measurement of an insures future obligations to its policyholders

62
Q

Liquidity

A

An insurers ability to make unpredictable payouts to policy owners

63
Q

Guaranty associations

A

Are established by all states to support insurers and protect consumers in case an insurer becomes insolvent

64
Q

Independent rating services

A

Our credit rating agencies that rate or grade the financial strength and stability

Insurance (13 decks)

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