Basic principles ch 1 Flashcards
Reserve
funds held by the company to help fulfill future claims. Minimum reserves set by Dept. of Insurance.
Multi-line insurer
Insurance company or independent agent that provides a one-stop shop for businesses or individuals seeking coverage for all their insurance needs. Ex. USAA offers individual policies like auto, homeowner, life and insurance!
Stock companies
insurance companies owned and controlled by a group of stockholders who investment in the company provides the safety margin necessary in issuance of guaranteed, fixed premium, & non participating policies.
Non-Participating plan
insurance under which the insured is not entitled to share in the divisible surplus of the company.
Mutual companies
insurance companies characterized by having no capital stock; it is owned by its policy owners and usually issues participating insurance.
Participating Plan
plan under which the policy owner receives shares (commonly called dividends) of the divisible surplus of the company.
Reinsurer
company that provides financial protection to insurance companies. Handle risks that are too large for insurance companies to handle on their own and make it possible for insurers to obtain more business than they would otherwise be able to.
Fraternal Benefit Societies
non profit benevolent organization that provide insurance to its members. Producers or agents who only sell within their society, do not receive commission, and stay under specific premium threshold often have less stringent licensing requirements.
The Fair Credit Reporting Act
federal law requiring an individual to be informed if she is being investigates by an inspection company. The law outlines the sharing and impact of such information and requires individuals to be notified prior to being investigated.
Buyer’s guide
informational consumer guide books that explain insurance policies and insurance concepts: in many states they are required to be given to applicants when certain types of coverage are being considered.
Policy Summary
summary of terms of an insurance policy, including the conditions, coverage limitations, and premiums. Often used with life, long term care and annuities.
National Association of Insurance Companies (NAIC)
all of the state insurance commissioners active in insurance regulatory problems and in forming and recommending model legislation and requirements.
State Guaranty Association
established by each state to support insurers and protect consumers in the case of insurer insolvency, guaranty associations are funded by insurers through assessments.
Life insurance
insurance against loss due to the death of a particular person (the insured) upon whose death the insurance company agrees to pay a stated sum or income to the beneficiary.
Term life insurance
protection for a set number of years; expiring without value if the insured survives the stated period. Designed to provide temp protection in case a person dies during set period of time.
Whole Life
permanent level insurance protections for a person’s “whole of life” from policy issue to the death of the insured. Characterized by premium levels, level benefits, and cash values.
Group Life
life insurance in which a single contract covers and entire group of people. Most often, the group is an employer-employee group. Those covered under group may or may not pay a portion of the premium and can usually choose their beneficiary. The Insured does NOT own the policy, the group(employer) owns and controls policy.
Consideration
part of an insurance contract setting forth the amount of initial and renewal premiums and frequency of future payments. Consideration is often said to include the initial premium and completed application for insurance.
The Insuring Agreement (Insuring Clause, Insurance provision)
portion of policy in which the insurer promises to make payment to or on behalf of the insured. States the scope and limits of coverage. Insuring agreemnent usually contained in a coverage form from which a policy is constructed. “ we ensure to INSURE you under these conditions for this amount”
Health insurance
insurance against loss through sickness or accidental bodily injury. Also called accident and health, accident and sickness, sickness and accident, or disability insurance. * General term “health insurance” applies to many different types of insurance not just medical insurance that pays for doctor/hospital visits.
Disability (income)
form of insurance that insures the beneficiary’s earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work.
Medical exspense
insurance pays benefitis for non surgical doctors’ feed commonly rendered in a hospital; sometimes pays for home and office calls
Entire contract
insurance policy provision stating that the application and policy contain all provisions and constitute the entire contract.
Notice of claim
policy provision that descries the policy owner’s obligation to provide notification of loss to the insurer within a reasonable period of time. Only requires the insurance company be NOTIFIED of loss, doesn’t require proof of loss.
Reinstatment
act of putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past due premiums requires. Most states have reinstatement laws requiring an insurer to allow for a policy to be reinstated upon request of the policy owner within a specified period of time.
Property insurance
policy that provides financial reimbursement to the owner or renter of a structure and its contents, in the even of damage or theft. Protects the things you own and rent.
Casualty (Liability) Insurance
broadly encompasses insurance not directly concerned with life , health, or property insurance. Includes vehicle, liability, theft, worker’s comp and elevator insurance. Protects you financially in the event someone sues you.
Property & Casualty Insurance
things you own have the potential to harm people in ways that could cause them to sue you. Auto, home owner’s, renter’s and umbrella insurance.
Proof of loss
mandatory health insurance provision stating that the insured must provide a completed claim form to the insurer within days of the date of loss. If the insured wants paid, they must PROVE the loss occured.
Deductible
amount of expense or loss to be paid by the insured before an insurance policy starts paying benefits. Typically apply to property, casualty, and health insurance.
Declaration page
piece of paper provides basic info about an insurance policy. 1st page (face) of an insurance policy. Specifies name of insured, address, policy period, location of property, policy limits, and other key info.
