Basic Principles

Question 1

reserve

Answer 1

funds held by the co. to help fulfill future claims

Question 2

multi-line insurer

Answer 2

insurance co./independent agent who is a one-stop shop for business/individuals seeking coverage for all insurance needs.

Question 3

stock companies

Answer 3

insurance companies owned and controlled by group of stockholders who investment in the co. provides the safety margin necessary in issuance of guaranteed, fixed premium, nonparticipating policies.

Question 4

nonparticipating plan

Answer 4

insurance where insured is not entitled to share in the divisable surplus of the co.

Question 5

mutual companies

Answer 5

insr. co. characterized by having no capital stock; owned by its policy owners and usually issues participating insurance.

Question 6

participating plan

Answer 6

plan under which the policy owner receives the shares (aka dividends) of the divisble surplus of the co.

Question 7

reinsurer

Answer 7

co. that provides financial protection to ins. co. handle risks that are too large for ins. co to handle on their own and make it possible for insurers to obtain more business than they would otherwise be able to

Question 8

fraternal benefit societiesare

Answer 8

nonprofit benevolent org. that provide insurance to its members. producers/agents who only sell within their society, do not receive commission, and stay under specific premium threshold often have less stringent licensing requirements.

Question 9

Fair Credit Reporting Act

Answer 9

law requires individual to be informed if she is being investigated by an inspection co. the law also outlines the sharing and impact of such info and requires individuals to be notified prior to being investigated.

Question 10

Buyer’s Guide

Answer 10

informational consumer guide book explain policies/insurance concepts.

Question 11

policy summary

Answer 11

summary of terms of insurance policy. incl. conditions, coverage limitations, and premiums.

Question 12

National Association of Insurance Commissioners (NAIC)

Answer 12

assoc. of all state insurance commissioners active in insurance reg. problems and in forming and recommending model legislation and requirments. do not MAKE laws, but suggest standards for states to adopt

Question 13

State Guaranty Association

Answer 13

est. by each state to support insurers and protect consumer in the case of insurer insolvency, guaranty assoc. are funded by insurers through assessments. ALL authorized insurers are legally required to participate in the State Guaranty Assoc for any state they are authorized to do business in regardless of where their corp. office is.

Question 14

Term Life Insurance

Answer 14

protect for set # of years, exp. without value if insured survives stated period. temp. protection in case person dies during set period of time.

Question 15

whole life

Answer 15

permanent lvl insurance protection for a person’s “whole of life”, from policy issues to the death of the insured.

Question 16

Group Life

Answer 16

a single contract covers an entire group of people. Most often, employer-employee group. those covered may or may not pay a portion of the premium and can usually choose their beneficiary. however, the insured does NOT own the policy, the group (employer) owns and controls the policy.

Question 17

property and casualty insurance

Answer 17

often referred to collectively. because the things you own have the potential to harm people in ways that could cause them to sue you. main kinds include auto insurance, home owners insurance. renters insurance and umbrella insurance.

Question 18

casualty (liability) insurance

Answer 18

includes vehicle insurance, liability insurance, theft insurance, workers comp, and elevator insurance. protects you financially in the event that someone sues you

Question 19

Consideration

Answer 19

part of an insurance contract setting forth the initial and renewal premiums and frquency of future payments.