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l&h > Chapter 1-Insurance Basics for Life & Health > Flashcards

Chapter 1-Insurance Basics for Life & Health Flashcards

1
Q

transfer of risk

A

Insurance

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2
Q

possibility or chance of loss

A

Risk

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3
Q

the company accepting the risk

A

Insurer

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4
Q

only the possibility of loss/insurance companies only take on these types of risks

A

Pure Risk

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5
Q

Individual has chance of gain or loss (gamble/investment)

A

Speculative Risk

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6
Q

Avoid
Reduce
Retain
Share
Transfer

A

Risk Management Techniques

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7
Q

Cause of loss (accidents & sickness)

A

Peril

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8
Q

Chance of loss

A

Hazard

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9
Q

physical in nature

A

Physical Hazard

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10
Q

based on a person’s values or ethics (take advantage)

A

Moral Hazard

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11
Q

Living an unnecessary, unhealthy or careless lifestyle

A

Morale Hazard

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12
Q

more numbers used to establish a statistic

A

Law of Large Numbers

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13
Q

spreading a risk over a group of investors

A

Lloyd’s

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14
Q

owned by stock or shareholders (non-participating)

A

Stock Company

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15
Q

policyholder does NOT receive a dividend-stock co

A

Non-Participating

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16
Q

owned by its policyholders

A

Mutual Company

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17
Q

policyholder receives a dividend (return of premium)-mutual

A

Participating

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18
Q

Risk-interest +expenses

A

Gross Premium

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19
Q

nonprofit entity organized under a lodge system
large enough membership to provide insurance protection to members

A

Fraternal

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20
Q

insurance between insurers to limit exposure

A

Reinsurance

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21
Q

of sound mind & legal age

A

Competent Parties

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22
Q

the purpose of the contract must be legal

A

Legal Purpose

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23
Q

offer and acceptance between applicant and insurer

A

Agreement

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24
Q

something of value is exchanged
premium and information for promise to pay

A

Consideration

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25
Q

when the company rejects the offer of the applicant, but comes back with a new offer

A

Counter Offer

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26
Q

promise or guarantee
does not apply to statements on an application

A

Warranties

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27
Q

truth to the best of the applicant’s knowledge

A

Representation

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28
Q

mistruth or lie

A

Misrepresentation

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29
Q

had the company been aware of it might change how or if the policy was issued

A

Material Statement

30
Q

hiding or withholding of the truth (lack of whole truth)

A

Concealment

31
Q

financial or emotional interest at the time of the sale

A

Insurable Interest

32
Q

permission of the individual or guardian of the one to be insured

A

Consent

33
Q

an agreement for the company to provide coverage on the client while still completing the underwriting process

A

Interim Insurance Agreement

34
Q

date coverage starts

A

Effective Date

35
Q

states coverage will begin either on the date of application or the date of the physical (if required) whichever is last IF the applicant was insurable on that date

A

Conditional Receipt

36
Q

coverage begins on the date of application unless notified otherwise

A

Binding Receipt

37
Q

agent checks the health status of the applicant one last time before delivery of the policy

A

Statement of Good Health

38
Q

contracts that pay a specified amount; life and disability are examples

A

Valued Contract

39
Q

a contract that is designed to reimburse the insured based on the extent of the loss

A

Reimbursement contract

40
Q

prepaid coverage that provides protection in the form of services rather than benefits (HMO)

A

Service Contract

41
Q

contract that requires certain events to occur before the company will pay claims

A

Conditional

42
Q

only one party in the contract can be held to a promise

A

Unilateral

43
Q

one party (the insurer) is responsible for wording leaving room for challenge if language is ambiguous

A

Adhesion

44
Q

contract of unequal exchange

A

Aleatory

45
Q

voluntarily give up known right

A

Waiver

46
Q

legally stopped from being able to enforce one’s legal right

A

Estoppel

47
Q

lying with the intent to gain

A

Fraud

48
Q

contract between the agent and the company

A

Agency Agreement

49
Q

representative of a principal

A

Agent

50
Q

intermediary who sells, solicits or negotiates insurance on behalf of a client

A

Broker

51
Q

clearly spelled out powers

A

Expressed

52
Q

powers not spelled out but allowed or expected

A

Implied

53
Q

power that looks “real”, but is not exist

A

Apparent

54
Q

situations in which an insurance company extends insurance coverage to an applicant whose actual risk is substantially higher than the risk known by the insurance company.

A

Adverse Selection

55
Q

written “offer” signed and made by the prospective insured

A

Application

56
Q

allows the agent to share information with the company concerning the applicant

A

Agent/Producer’s Report

57
Q

report completed by the insured’s current physician

A

Attending Physician’s Report or Attending Physician’s Statement

58
Q

a source that subscribing companies use to share application information to verify the information gathered in the application process

A

Medical Information Bureau (MIB)

59
Q

federal legislature designed to protect consumer information requiring the applicant the ability to know who is gathering the information, see what is being gathered and correct misinformation collected

A

Fair Credit Reporting Act

60
Q

financial report of information on applicant

A

Credit Report

61
Q

a report concerning the financial, moral, physical or any other relevant information about applicant

A

Inspection Report

62
Q

hobby of applicant that may impact risk

A

Avocation

63
Q

better than average risk

A

Preferred

64
Q

average risk

A

Standard

65
Q

below average risk

A

Substandard

66
Q

rejection of risk

A

Declined

67
Q

risk-interest=

A

Net Premium

68
Q

monthly, annual, etc

A

Premium Modes

69
Q

Obligations at Death
Estate Building
Living Benefits
Property
are all what?

A

Uses for Life Insurance

70
Q

How much death benefit would it take if the insured died today ?
This is what type of valuation approach?

A

Needs Approach (Immediate, final exp, future needs of survivors)

71
Q

if the insured died today, what is the potential loss of future earnings?
This is what type of valuation approach?

A

Human Life Value Approach

l&h (10 decks)

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