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Health Insurance > Ch 1 General Insurance > Flashcards

Ch 1 General Insurance Flashcards

1
Q

For the purpose of insurance what is risk?

A

Uncertainty of loss

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2
Q

The type of insurance company organized to return any surplus money to its policyholders is known as what?

A

Mutual company

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3
Q

What do individuals use to transfer the risk of loss to a larger group?

A

Insurance

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4
Q

When would a misrepresentation on an insurance application be considered fraud?

A

When it is intentional and material

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5
Q

What entities make up the medical information bureau?

A

Insurers

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6
Q

The insurer organized to return a profit to the stockholders is what type of insurer?

A

Stock company

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7
Q

What document is required for an insurance company to transact insurance?

A

Certificate of authority

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8
Q

What are the three types of hazards?

A

physical, moral and morale

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9
Q

In insurance, when is the offer usually made on a contract?

A

When the insurance application is submitted

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10
Q

Informing an insurance contract, when does an acceptance usually occur?

A

When the insurer approves a prepaid application

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11
Q

When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

A

Insurer

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12
Q

Insurers are classified according to the domicile. What are the three types of insurers?

A

Domestic, foreign, and alien

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13
Q

What type of risk is insurable?

A

Pure

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14
Q

What is a warranty in an insurance contract?

A

An absolutely true statement upon which the validity of the insurance contract is based

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15
Q

Wagering on a sporting event is known as what type of risk?

A

Speculative

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16
Q

What are the strategies used by underwriters to prevent adverse selection?

A

Restriction of coverage, refusal to accept the risk, and accepting a risk at a higher rate

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17
Q

What are the three types of agent authority?

A

express, implied and apparent

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18
Q

What type of insurer is formed under the laws of another country?

A

Alien

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19
Q

An applicant conceals relevant health information on the application. The applicant presents what type of hazard?

A

Moral

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20
Q

Who’s responsibility is it to determine that all the questions on an insurance application are answered?

A

The agents

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21
Q

A situation in which a person can only experience a loss and no game present what type of risk?

A

Pure risk

22
Q

Insurance is a contract that protects the insured from what?

A

Loss

23
Q

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

A

Complete a new application or ask the applicant to initial the correction on the original application

24
Q

an insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer’s classification in Nevada?

A

Foreign

25
Q

When does an insurance policy go into effect?

A

When the policy is delivered and the premium is paid

26
Q

What is the best way to handle incomplete insurance applications?

A

Return the application to the applicant for completion

27
Q

If an insurer meets the states financial requirements and is approved to transact business in the state, it is considered what type of insurer?

A

Authorized or admitted

28
Q

An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

A

Mutual

29
Q

Whom does an insurance agent represent?

A

Insurance company

30
Q

Insurance company that is formed under the laws of another state is known as what type of insurer?

A

Foreign

31
Q

A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?

A

Morale

32
Q

What are the five characteristics of an ideally insurable risk?

A

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) coverage cannot be mandatory.

33
Q

According to the law of agency, a principal is represented by whom?

A

Agent or producer

34
Q

If an applicant does not receive his or her insurance policy, who would be held responsible?

A

The agent

35
Q

What is the term for the causes of loss insured against an insurance policy?

A

Peril

36
Q

Conditions that increase the chance of loss or known as what?

A

Hazards

37
Q

If an agent fails to obtain the applicant signature on the insurance application what must the insurer do?

A

Send the application back to the applicant for signature

38
Q

What two elements are necessary for life insurance contract to have a legal purpose?

A

Insurable interest and consent

39
Q

What are the four elements of an insurance contract?

A

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

40
Q

In the agent/insurer relationship, who is considered the principal

A

Insurer

41
Q

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

A

Loss

42
Q

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

A

Fiduciary

43
Q

When risk with higher probability of loss are seeking insurance more often than other risk, this is known as what?

A

Adverse selection

44
Q

Who owns stock companies?

A

Stockholders

45
Q

Physical hazards

A

individual characteristics that increase the chances of the cause of loss.

Physical hazards exist because of a physical condition, past medical history, or a condition at birth, such as blindness.

46
Q

Moral hazards

A

tendencies toward increased risk.

Moral hazards involve evaluating the character and reputation of the proposed insured. Moral hazards refer to those applicants who may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer.

47
Q

Morale Hazards

A

state of mind that causes indifference toward loss, such as carelessness.

Mindset of I have insurance and so it doesn’t matter what I do because the insurance company will take care of it. (If i’m insured, why should I worry)

48
Q

Insurers must obtain a _______________ prior to transacting business in this state.

A

Certificate of Authority

49
Q

______ = unequal values

A

Aleatory

50
Q

Methods of handling risk:

A 
Avoidance
Retention
Sharing
Reduction
Transfer
51
Q

Approved by the Department of Insurance and has a Certificate of Authority

A

Authorized/Admitted

52
Q

breach of warranties, concealment, fraud - (all can void the contract) are known as what:

A

Material misrepresentations

Health Insurance (16 decks)

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