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Life and Health Test > Chapter 1 General Insurance > Flashcards

Chapter 1 General Insurance Flashcards

1
Q

What is another name for Insurance Companies?

A

Insurers and Carriers

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2
Q

captive or independent organizations that recruit, contract with, train, and support insurance producers

A

Insurance Agencies

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3
Q

licensed individuals representing and appoint by an insurance company when transacting insurance business

A

Insurance Producers

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4
Q

person or entity that is covered by the insurer which covers losses due to loss of life, health, property, or liability

A

Insured

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5
Q

not necessarily the insured under the policy but who is responsible for paying the premium

A

Owner

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6
Q

National Association of Insurance Commissioners

A

NAIC

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7
Q

How is the insurance industry regulated?

A

Primarily on the state level

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8
Q

Who writes the state insurance laws?

A

Legislative Branch

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9
Q

Who is responsible for interpreting insurance laws?

A

Judicial Branch

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10
Q

Who enforces insurance laws?

A

Executive Branch

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11
Q

Owned by stockholders or shareholders. Directors and officers, which are elected by stockholders manage to carry out company mission. Policy Holders are NOT entitled to receive any dividends

A

Stock Insurance Company

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12
Q

Owned by policy holders. Board of trustees or directors are elected by policyholders to manage company mission. Policy holders MAY receive non taxable dividends if any surplus

A

Mutual Insurance Company

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13
Q

Group owned insurer whose main activity is risk sharing, they are unincorporated, formed by individuals, firms, and business corporations that exchange insurance on one another

A

Reciprocal Insurance Company

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14
Q

NOT an insurance company but consists of groups of underwriters called syndicates that each specialize in insuring a particular risk.

A

Lloyd’s of London

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15
Q

Primarily non-profit social organizations that engage in charitable and benevolent activities that provide life and health insurance to their members. Membership typically consists of members of a given faith, lodge, order, or society.

A

Fraternal Benefit Societies

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16
Q

Group owned insurer who primarily assume and spread liability-related risks of its members. Owned by policy holders, and are licensed in at least one state. Must have sufficient liquid assets to meet loss obligation.
IE: theme parks, go-cart tracks, or water slides

A

Risk Retention Groups (RRG)

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17
Q

Assume all financial risk faced without transferring that risk to an insurer. Generally an option only for large companies who may limit their risk by only self-insuring up to a certain dollar amount of risk and then acquiring insurance for dollar amounts in excess of that amount

A

Self Insurers

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18
Q

Minimizing the chance of a loss without eliminating the risk altogether is called _________.

A

Risk Reduction.

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19
Q

The ____ or _______ is the one looking to transfer some or all of the financial risk of loss it faces over to a reinsurer.

A

Ceding or Primary company

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20
Q

_________ is the intentional withholding of material facts pertinent to policy issue or rating, and may result in denial of coverage or void the policy.

A

Concealment

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21
Q

Refers to the jurisdiction (state or country) where and insurer is formed or incorporated

A

Domicile

22
Q

An insurer organized under the laws of the state

IE: An insurer incorporated in Ohio is considered _____ to Ohio.

A

Domestic Insurer

23
Q

An insurer organized under the laws of any other state, possession, territory, or the District of Columbia of the US.
IE: An insurer incorporated in Ohio is considered ______ to Kansas

A

Foreign Insurer

24
Q

An insurer organized under the laws of any jurisdiction outside the US
IE: An insurer incorporated in Ontario, Canada, is considered _______ to Ohio.

A

Alien Insurer

25
Q

The insurable interest on one’s own life is generally regarded as _______.

A

Unlimited

26
Q

An ________ contract is a contract in which unequal values exchanged.

A

Aleatory

27
Q

_______ are insurance companies that operate to accept all or a portion of the financial risk of loss from the primary or ceding insurance

A

Reinsurance Companies

28
Q

Reinsurance agreement that automatically accepts all new risks presented by the ceding insurer

A

Treaty

29
Q

Reinsurance agreement that allows the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature

A

Facultative

30
Q

Specifically granted in the agents contract.
IE: a contract may grant a producer the authority to bind certain types of risk, but also state that the binding authority is limited if certain conditions apply

A

Express Authority

31
Q

Not specifically stated in contract, but reasonable and necessary for the producer to carry out specifically stated duties
IE: if a contract grants express authority to transact insurance business, this implies the authority to give quotes and collect premiums

A

Implied

32
Q

When the principal’s conduct gives the general appearance that the authority exists.
IE: A producer’s use of preprinted forms, letterhead, business cards, and rate books bearing the insurer’s company logo all demonstrate _______ authority

A

Apparent

33
Q

Protects consumer privacy and protects the public from overly intrusive information collection practices. It ensures data collected is confidential, accurate, relevant, and used for a proper and specific purpose

A

Fair Credit Reporting Act (15 USC 1681 - 1681d)

34
Q

Situations where there is a chance for loss, gain, or neither loss nor gain to occur; cannot be insured
IE: gambling/investing

A

Speculative Risk

35
Q

Situations where there is no chance for gain; the only outcome is for nothing to occur or for a loss to occur; this type of risk is the ONLY risk that can be insured

A

Pure Risk

36
Q

Reduction, decrease, or disappearance of value.

A

Loss

37
Q

Cause or source of a loss

IE: fire, windstorm, disease, death

A

Peril

38
Q

A condition that increases the probability, likelihood, or severity of a loss from a peril

A

Hazard

39
Q

A physical condition that increases the likelihood of a loss; this hazard can often be seen, heard, felt, tasted, or smelled
IE: Flammable material by a furnace

A

Physical Hazard

40
Q

Dishonest tendencies that increase the probability of a loss; Most closely related to some form of lying, cheating, or stealing
IE: An insured burns down his/her own house to collect the insurance payout

A

Moral Hazard

41
Q

An attitude of indifference toward the risk of loss that increases the probability of a loss occurring
IE: Driving too fast for conditions, not wearing a seat belt, ignoring stop signs at familiar intersections

A

Morale Hazard

42
Q

Pertains to the formation and enforcements of contracts

A

Contract Law

43
Q

____ are civil wrongs; they’re not crimes or breaches of contract.

A

Tort Law

44
Q

Contractual agreement that transfers liability of one party to another; used by landlords, contractors, and others to reduce risk

A

Hold Harmless Agreement

45
Q

What a reasonable and prudent policyowner would expect; the reasonable expectations of policyowners are honored by the Courts although the strict terms of the policy may no support these expectations

A

Reasonable Expectations Doctrine

46
Q

What’re the four elements of a legal contract?

A
  1. Competent Parties, 2. Legal Purpose, 3. Agreement, 4. Consideration
47
Q

The exchange of value is unequal

A

Aleatory Contract

48
Q

A contract that pays a specified amount regardless of the actual loss.
IE: Life Insurance Contract

A

Valued Contract

49
Q

Statements made by the applicant are considered _____ NOT warranties. Believed to be true to the best of the knowledge and belief of the applicant/insured at the time of application.

A

Representations

50
Q

Statements in the application or stipulations in the policy that are guaranteed

A

Warranties

51
Q

Willfully holding back or secretion of material facts pertinent to the issuance of insurance (or claim); may result in denial of coverage and may void the policy

A

Concealment

Life and Health Test (5 decks)

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