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Life Insurance > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Is an insurer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.

A

Captive Insurer

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2
Q

Is reponsible for processing, investigating, and payin claims.

A

Claims Department

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3
Q

Is the amount of earnings paid to policyowners as dividends after teh insurance company sets aside funds required to cover resersves, operating expenses, and general business purposes.

A

Divisible Surplus

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4
Q

Is an insurer with it’s principal or home office in a state where it is authorized.

A

Domestic Insurer

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5
Q

Are nonprofit benevolent organizations that provide insurance to its members.

A

Fraternal Benefit Societies

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6
Q

Is an insurer with it’s principal office or domicille location in a state different from the state it is transacting insurance business.

A

Foreign Insurer

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7
Q

Make up a specialized branch of the industry, primarily providing polices with small face amounts with weekly premiums. Other names for industrial insurers inclde home service or debit insurers.

A

Industrial Insurers

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8
Q

The transfer of risk through the pooling or accumulations of funds.

A

Insurance

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9
Q

Is the customer receiving insurance protection under an insurance policy.

A

Insured

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10
Q

Is the insurance company

A

Insurer

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11
Q

Is NOT an insurer, but a group of individuals and companies that underwrite unusual insurance

A

Lloyds of London

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12
Q

is an insurance company or independent agent that provides a one-shop for business or individual seeking coverage for all their insurance needs. For example, many large insurers offer indidvual policies for automobile, homowner, long-term care, life, and health insurance needs.

A

multi-line insurer

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13
Q

Companies are insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance.

A

Mutual Insurance Company

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14
Q

Or unathorized insurer is an insurer who has not recieved a certificate of authoriy from a state’s department of insurance authorizing them to conduct insurance business in that state.

A

Non-admitted Insurer

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15
Q

Insurance policy typically issued by stock companies, do not allow policyowners to particiapte in dividends or electing the board of directors.

A

Nonparticipating Policy

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16
Q

Is an insurance policy under which the policyowners share in the companys earning through recipt of dividends and also elect the companys board of directors.

A

Participating Plan

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17
Q

Insurance companies are companies owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned

A

Private (Commerical) Insurer

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18
Q

Is an unincorporated organization in which all members insure one another

A

Reciprocal Insurer

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19
Q

Is the acceptance by one or more insurers, called reinsurers of a portion of the risk underwritten by another insurer who has contracted for the entire coverage.

A

Reinsurance

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20
Q

Is a company that provides financial protection to insurace companies. Handle risks that are too large for insurance companies to handle on their own and make it possible for insurers to obtain more bsuiness than they would otherwise be able to.

A

Reinsurer

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21
Q

Is a groupd-owned liability insurer which assumes and spread product liability and other forms of commerical liablilty riskes among its members.

A

Risk Retention Group

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22
Q

Establishes a self-funded plan to cover potential losses instead of transferriring the risk to an insurance company.

A

Self Insurers

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23
Q

Is an insurance company owned and controlled by a group of stockholders (or share holders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fix premium, nonparticipating polices.

A

Stock Insurace Company

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24
Q

Is nontraditional insurace only available form a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers

A

Surplus Lines Insurance

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25
Q

Is the department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications.

A

Underwriting Department

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26
Q

Or authorized insurer is an insurer who has received a certificat of authority from a state’s department of insurance authorizing them to conduct insurance business in that state.

A

Admitted Insurer

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27
Q

Is a license issued to an insurer by a department of insurance (or equivalent state agency) which auhtorizes that company to conduct insurance business in that particular state.

A

Certificate of Authority

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28
Q

Calculates policy rates, reserves, and dividends

A

Actuarial Department

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29
Q

In the United States is an insurer whose principal office and domiciled locaton is outside the country.

A

Alien Insurer

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30
Q

Represents themselves and the insured (i.e., the client or customer).

A

Broker

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31
Q

Indicates a company’s ability to make unpredictable payouts to policyowners.

A

Liquidity

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32
Q

Are the accounting measurement of an insurer’s future obligations to its policyholders.

A

Reserves

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33
Q

In the insurance industry a rating service company’s primary purpose is to determine the financial strength of the industry’s insurers.

A

Rating Service

34
Q

Is the appearance or assumption of authority based on the principals actions, words or deeds.

A

Apparent authority

35
Q

Is the unwritten authority that is not expressly granted but which the agent is assumed to have in order to transact the business of the principal.

A

Implied Authority

36
Q

A principal deliberately gives to its agent

A

Express authority

37
Q

Is a person who acts for another person or entity known as the principal with regard to contractual arrangements with third parties.

A

Agent

38
Q

Often shortened to the affordable care act (ACA) It represents one of the most significant regulatory overhauls and expansions of health insurance coverage in U.S history.

A

2010-Patient Protection and Affordable Care Act (PPACA)

39
Q

Allows consumers to include thier phone numbers on the list to which telemarketers cannot make solicitation calls.

A

2003- Do Not Call Implemenation Act

40
Q

The Patriot act which amends the bank secrecy Act (BSA) was adopted in response to the September 11, 2001 terrorist attacks the Patriot Act is intented to strengthen U.S measures to pervent detect and deter terriosts and thier funding. The act also aims to prosecute international money laudering and the financing of terrorism. These efforts include anit-money laundering (AML) tools that impact the banking financial and investment comunities.

A

2001-Uniting and strenghtening America by providing appropriate tools required to interupt and obstruct Terrorism Act

41
Q

Congress passed ____ which repealed the glass steagall Act under this new legislation, commercial banks investment banks retail brokerages and insurance companies can now enter each others lines of business.

A

1999-Financial Services Modernization Act

42
Q

It is a criminal offense for an indvidual who has been convicted of a felony involving dishonesty or breach of trust to willfully engage or particiapte (in any capacity) in the bueisness of insuance without first obtaining a “letter of written consent to engage in the business of Insurance” from the regulating insurance department of the individuals state of residence.

A

1944-United States Code (USC) Section 1033 and 1034. According to 18 U.S.C 1033 And 1034

43
Q

Requires fair and accurate reporting of information about consumers, including applications for insurance Insurers must inform applicants about any investigation that are being made upon completion of the application.

A

1970-Fair Credit Reporting Act

44
Q

The suprem court ruled that federal securites laws applied to insurers that issued variable annuties and thus required these insurers to confirm to both SEC and state regulation. The SEC regulates variable life insurance.

A

1959-Intervention by the SEC

45
Q

suprem court held that the McCarran-Ferguson Act disallowed such supervision by the FTC, a federal agency. Additonal attempts have been made by the FTC to force further federal control but none have been succesful.

A

1958-Intervention by the FTC

46
Q

This law made it clear that the states continued regulation of insurance was in the publics best interest. However it also made possible the application of federal antitrust laws to the extent that (the insurance business) is not regulated by state law.

A

1945-The McCarran Ferguson Act

47
Q

In the SEUA case the suprem court ruled that the insurance industry is subject to a series of federal laws many of wihich conflicted with existing state laws. As such insurance is a form of interstate commerce to be reguated by the federal government.

A

1944-United States v. Southeastern underwriters Association (SEUA)

48
Q

This case which the U.S suprem court decided involved one state’s attempt to regulate an insurance company domiciled in another state.

A

1868-Paul v Virginia

49
Q

Operates on the basis of loss-sharing by group members.

A

Pure Assessment Mutual company

50
Q

The company assuming the risk.

A

Reinsurer

51
Q

The company transferring the risk.

A

Ceding Company

52
Q

Is not an insurer but rather a syndicate of individuals and companies that individually underwrite insurance.

A

Lloyd’s of London

53
Q

the organization must be nonprofit have lodge system that includes ritualistic work and maintain a represtative form of government with elected officers.

A

Fratrnal benefit socity

54
Q

Are organized on the basis of ownership by their policy-holders.

A

Reciprocal insurers

55
Q

Risk purchasing group only has to be licensed in one sate but may insure members in any state.

A

Risk retention group

56
Q

is the amount of earnings paid to policyowners as dividends after the insurance company sets aside funds required to cover reserves operating expenses and general business purposes.

A

Divisible surplus

57
Q

allow policyholders to participate in the company by electing the board of directors and receiving dividends from the divisible surplus.

A

Participating

58
Q

Are referred to as paricipating companies because the policyowners participate in dividends.

A

Mutual Companies

59
Q

Do not allow policyholders to participate in board elections or dividends and instead aim to increase profit for the shareholders.

A

Nonparticipating

60
Q

Typically issues nonparticipating insurance policies

A

Stock insurance company

61
Q

Two types of insurance companies

A

Private vs. Government Insurance

62
Q

creates an instant estate, regardless of when death occures.

A

Life Insurance

63
Q

May or may not be policy holders.

A

Stockholders

64
Q

Companies that sell more than one line of insurance

A

Multi-line insurers

65
Q

Insurance evolved to produce a practical solutions to economic uncertainties and losses.

A

practical solution

66
Q

Is that most contracts offered to individuals and organizations in society, including health, property and casualty polices are contract of indemnity whose primary purpose is to pay off financial losses and reimburse the insured

A

Benefit of Insurance

67
Q

Is the transfer of risk from one party to another through a legal contract or the transfer of risk through the pooling (accumulation of funds)

A

Insurance

68
Q

In a reinsurance agreement the insurance company that transfers its loss exposure to another insurer is called the primary insurer

A

Primary Insurer

69
Q

The most common reinsurance contract between two insurance companies, which involves an automatic sharing of the risk asuumed.

A

Treaty reinsurance

70
Q

An insurer establised and owned by a parent firm for the purpose of insuring the parent firms loss exposure.

A

Captive Insurer

71
Q

Refer to the non traditional insurance market

A

Surplus Lines

72
Q

characterized by relatively small face amounts with premiums paid weekly.

A

Industrial Insurance

73
Q

establishes a self funded plan to cover potential losses

A

Self Insurer

74
Q

divisions are responsible for increasing the number of prospetive applicants.

A

Marketing or Sales

75
Q

typically the department completing the application.

A

Sales Department

76
Q

responsible for reviewing applicantions, conducting investigations to gain additional informatoin about applicants assigning risk classifications and approving or deciding an applicantion.

A

Underwriting department

77
Q

is responsible for processing, investigating and paying claims for losses incured by insureds.

A

claims department

78
Q

calculates policy rates, reserves and dividends and make other applicable statistical studies and reports focusing on mortality tables.

A

Acturial department

79
Q

between the insured or beneficiary and the insurer, the agents who solicits and insurance applications represents the insurer and not the insured or beneficiary.

A

Dispute

80
Q

Agents are also classified as captive

A

Captive, career agent, independent agent

81
Q

are branches of major stock and mutual insurance companies that are contracted to represent an insurer in a specific area.

A

career agencies

Life Insurance (3 decks)

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