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Insurance License > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

A legal representative of an insurance company

A

Agent/producer

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2
Q

A person applying for insurance

A

Applicant or proposed insured

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3
Q

And insurance producer not appointed by an insurer and is deemed to represent the client

A

Broker

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4
Q

A contract between a policy owner and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

A

Insurance policy

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5
Q

The person covered by the insurance policy. This person may or may not be the policy owner

A

Insured

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6
Q

The company who issues an insurance policy

A

Insurer

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7
Q

The person entitled to Exercise the rights and privileges in the policy

A

Policy owner

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8
Q

The money paid to the insurance company for the insurance policy

A

Premium

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9
Q

A mutual interchange of rights and privileges

A

Reciprocal/reciprocity

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10
Q

The transfer of risk

A

Insurance

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11
Q

Insurance transactions include any of the following

A

Solicitation
Negotiations
Sale (contract of insurance)
Advising an individual concerning coverage or claims

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12
Q

The uncertainty or chance of a loss occurring

A

Risk

Not insurable

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13
Q

Refers to situations I can only result in a loss or no change. There is no opportunity for financial gain. It is the only type of risk that insurance companies are willing to accept

A

Pure risk

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14
Q

Involves the opportunity for either loss or gain. An example is gambling, these types of risks are not insurable

A

Speculative risk

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15
Q

A unit of measurement used to determine rates charged for insurance coverage

A

Exposure

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16
Q

A large number of units having the same or similar exposure to loss

A

Homogeneous

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17
Q

Conditions or situations that increase the probability of an insured loss occurring

A

Hazards

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18
Q

TYPES OF HAZARDS
Are those arising from the material, structural, or operational features of the risk, apart from the person owning or managing it

A

Physical

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19
Q

TYPES OF HAZARDS
Refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer

A

Moral

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20
Q

TYPES OF HAZARDS
Refers to an increase in the hazard presented by a risk ( I’m not going to bother fixing this. If it breaks my insurance will pay to replace it)

A

Morale

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21
Q

The causes of loss insured against in an insurance policy

A

Perils

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22
Q

Insurers against the financial loss caused by the premature death of the insured

A

Life insurance

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23
Q

Ensures against the medical expenses and or loss of income by the injured’s sickness or accidental injury

A

Health insurance

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24
Q

Ensures against the loss of physical property or the loss of income producing abilities

A

Property insurance

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25
Q

Ensures against the laws and or damage of property and resulting liabilities

A

Casualty insurance

26
Q

A chance that a loss will occur

A

Risk

27
Q

Increases the probability of loss

A

Hazard

28
Q

The cause of loss

A

Peril

29
Q

The plans assumption of risk by an insured through the use of the duct a bowl ‘s, copayments, or self insurance

A

Retention

30
Q

A method of dealing with the risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group

A

Sharing

31
Q

Attempt to lessen the probability or severity of a loss. This would include actions such as installing smoke detectors in our homes, having an annual physical to detect health problems early

A

Reduction

32
Q

The most effective way to handle risk

A

Transfer

33
Q

A loss that is outside the insureds control

A

Due to chance

34
Q

A loss that is specific as to the cause, time, place and I’m out. And ensure must be able to determine how much the benefit will be and when it becomes payable

A

Definite and measurable

35
Q

Ensures must be able to estimate the average frequency and severity of future losses and set appropriate premium rates

A

Statistically predictable

36
Q

Insurers need to be reasonably certain their losses will not exceed specific limits. That is why insurance policies exclude coverage for loss caused by war or Nick nuclear events, there is no statistical data showing how much would need to be covered from events like these

A

Not catastrophic

37
Q

There must be a sufficiently large pool of the ensured that represents a random selection of risks in terms of age, gender, occupation, health and economic status, and geographic location

A

Randomly selected and large loss exposure

38
Q

The ensuring of risks that are more prone to losses than the average risk. Poor risks tend to seek insurance or file claims to a greater extent than better risks

A

Adverse selection

39
Q

States that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be

A

Law of large numbers

40
Q

A contract under which one insurance company (the reinsurer) Indemnifies another insurance company For part or all of its liabilities. The purpose is to protect ensures against catastrophic losses

A

Reinsurance

41
Q

Private policies are funded by?

A

Premiums

42
Q

Government insurance is funded with?

A

Taxes

43
Q

When reinsurance is purchased on a specific policy

A

Facultative reinsurance

44
Q

Are owned by the policy owners and issue participating policies

A

Mutual companies

45
Q

Insurers who made the states financial requirements in our approved to transact business in the state are considered

A

Admitted insurers

46
Q

Insurers must obtain a _____ prior to transacting business/insurance within the state

A

Certificate of authority

47
Q

A ___ insurer is an insurance company that is incorporated outside the U.S

A

Alien

48
Q

An individual license to sell, solicit or negotiate insurance contracts on behalf of the principal (insurer)

A

Agent/producer

49
Q

___ Defines the relationship between the principal and the agent/producer within the scope of authority are deemed to be the acts of the insurer

A

The law of agency

50
Q

What of 3 types of agent authority is this?
The authority of principle intends to grant to an agent by means of the agents contract. It is the authority that is written in the contract

A

Express

51
Q

What of 3 types of agent authority is this?
Authority that is not expressed or written into contract, but which the agent is assumed to have in order to transact the business of insurance for the principal

A

Implied

52
Q

What of 3 types of agent authority is this?
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created

A

Apparent

53
Q

Because an agent handles the funds of the insured and the insurer he/she has ____

A

Fiduciary responsibility

54
Q

Describes the way companies and producers should conduct their business. It is a code of ethics for producers

A

Market conduct

55
Q

In order for insurance contracts to be legally binding, they must have four essential elements

A
  1. Agreement - offer and acceptance
  2. Consideration
  3. Competent parties
  4. Legal purpose
56
Q

______ Takes place when an insure’s underwriter approve the application and issue the policy

A

Acceptance

57
Q

______ something of value that each party gives to the other, the insured’s consideration is payment of premium, the insurers consideration is the promise to pay in the event of loss

A

Consideration

58
Q

Ensure is only liable for the extent of a loss, insurance or stores to the condition prior to loss

A

Indemnity (reimbursement)

59
Q

Breach of warranties, concealment fraud all can void the contract

A

Material misrepresentations

60
Q

A legal term for withholding information that is crucial in making a decision

A

Concealment

61
Q

What is a unit of measurement an underwriter uses when determining the premium rates for insurance

A

Exposure

Insurance License (5 decks)

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