Basic principles ch 1

Question 1

Reserve

Answer 1

funds held by the company to help fulfill future claims. Minimum reserves set by Dept. of Insurance.

Question 2

Multi-line insurer

Answer 2

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!

Question 3

Stock companies

Answer 3

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.

Question 4

Non-Participating plan

Answer 4

insurance under which the insured is not entitled to share in the divisible surplus of the company.

Question 5

Mutual companies

Answer 5

insurance companies characterized by having no capital stock; it is owned by its policy owners and usually issues participating insurance.

Question 6

Participating Plan

Answer 6

plan under which the policy owner receives shares (commonly called dividends) of the divisible surplus of the company.

Question 7

Reinsurer

Answer 7

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.

Question 8

Fraternal Benefit Societies

Answer 8

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.

Question 9

The Fair Credit Reporting Act

Answer 9

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.

Question 10

Buyer’s guide

Answer 10

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.

Question 11

Policy Summary

Answer 11

summary of terms of an insurance policy, including the conditions, coverage limitations, and premiums. Often used with life, long term care and annuities.

Question 12

National Association of Insurance Companies (NAIC)

Answer 12

all of the state insurance commissioners active in insurance regulatory problems and in forming and recommending model legislation and requirements.

Question 13

State Guaranty Association

Answer 13

established by each state to support insurers and protect consumers in the case of insurer insolvency, guaranty associations are funded by insurers through assessments.

Question 14

Life insurance

Answer 14

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.

Question 15

Term life insurance

Answer 15

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.

Question 16

Whole Life

Answer 16

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.

Question 17

Group Life

Answer 17

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.

Question 18

Consideration

Answer 18

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.

Question 19

The Insuring Agreement (Insuring Clause, Insurance provision)

Answer 19

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”

Question 20

Health insurance

Answer 20

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.

Question 21

Disability (income)

Answer 21

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.

Question 22

Medical exspense

Answer 22

insurance pays benefitis for non surgical doctors’ feed commonly rendered in a hospital; sometimes pays for home and office calls

Question 23

Entire contract

Answer 23

insurance policy provision stating that the application and policy contain all provisions and constitute the entire contract.

Question 24

Notice of claim

Answer 24

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.

Question 25

Reinstatment

Answer 25

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.

Question 26

Property insurance

Answer 26

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.

Question 27

Casualty (Liability) Insurance

Answer 27

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.

Question 28

Property & Casualty Insurance

Answer 28

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.

Question 29

Proof of loss

Answer 29

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.

Question 30

Deductible

Answer 30

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.

Question 31

Declaration page

Answer 31

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.