Chapter 1: Flashcards
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agent’s
What are the five characteristics of an ideally insurable risk?
Lost must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory
For the purpose of insurance, what is risk?
Uncertainty of loss
Who owns stock companies?
Stockholders
An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer’s classification in Nevada?
Foreign
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
What type of risk is insurable?
Pure
If an insurer meets the state’s financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
What are the three types of agent authority?
Express, implied and apparent
When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
Insurer
When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?
Adverse selection
An applicant conceals relevant health information on the application. The applicant presents what type of hazard?
Moral
What entities make up the Medical Information Bureau?
Insurers
The insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
If an applicant does not receive his or her insurance policy, who would be held responsible?
The agent
What do individuals use to transfer their risk of loss to a larger group?
Insurance
Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, foreign and alien
What is the term for the causes of loss insured against in an insurance policy?
Peril
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
Insurance is a contract that protects the insured from what?
Loss
What document is required for an insurance company to transact insurance?
Certificate of Authority
When would a misrepresentation on and insurance application be considered fraud?
When it is intentional and material
What are the three types of hazards?
Physical, moral and morale
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application