Chapter 11 The Insurance MarketPlace Flashcards
What is an Annuity
These are investment products, sold by insurance companies, that can provide fixed or variable payments, with immediate in the future, for a specific number of years or for the life of a recipient.
What are the major differences between gov insurance and other types of coverage?
- Participation is mandatory for eligible citizens
- Benefits are prescribed by law and changes in benefits result from changes in law
- Social insurance is to meet the public’s needs rather than to be equitable, so people with less usually receive greater benefits
- Governments are the only carriers of gov insurance, so it is not available in the private sector.
What is a Stock Company?
This is an incorporated firm owner by stockholders(shareholders.) Insurance policies are issued through the corporation. Normally issue non-participating, or “non par” policies that do not pay policy dividends .
What is mutual Company?
This is owned by policy holders who contribute capital through the purchase of policies. These companies usually issue policies that allow policyholders to share in any divisible surplus through the payment of dividends.
What is a RECIPROCAL COMPANY?
This is an unincorporated group ran by An attorney-in-fact. Members are called subscribers. They share the risk for all fellow subscribers. Min number of members is 25.
What is a fraternal benefit society?
This is an incorporated society, order, or supreme lodge that is formed and operated solely on behalf of the members. They can be nonprofit religious, charitable or benevolent organizations, and issue no capital stock. They have a representative form of government and a ritualistic work order.
What is retention Limit?
This is the maximum amount of risk an insurance company will accept
What is an Actuarial department?
These departments consist of professional statisticians who:
1. Determine the rates insurers charge for their insurance products
2. Track the expenses of the insurers
3. Advise the company regarding profit and loss scenarios
To be SOLVENT an insurance company must:
- Be able to cover its liabilities
- Be able to reinsure outstanding risks
- have additional assists equal to the required paid in capital. Paid in Capital is the lesser of the value of the company’s assets in excess of all liabilities(net worth) or the combined total of all issues shares of stock, including treasury shares.
What is Conservation?
This is when the commissioner of Insurance has takes over the business assets of an insolvent insurer to reorganize it.
What is the California Insurance Guaranty association act?
This provides protection to claimants or policyholders because of insolvency of an insurer and provides and association to assess the cost of the insolvency among insurers.
Which type of insurers are members of the Cali Insurance Guaranty Association Act?
Life, Disability, Title, Surety, Credit, Mortgage Guaranty, Worker’s comp and ocean marine insurers are EXCLUDED
What is the California Life and health Guarantee Association?
This is a non-profit organization that resulted from a merger of the Cali Life Insurance Guaranty Association and The robbins-sea strand Health Insurance Guaranty Association.
Those that are not California residents and are members of the Cali Life and Health Guarantee Association can be covered in the following cases:
- The issuing insurer is domiciled in Cali
- The insurer never held a Certificate of Authority in the state in which the covered person resides
- The resident state of the covered person has a Guaranteee Association Similar to that of Cali
- The covered person is not eligible for coverage under the association in their state of residence.
*the beneficiaries, payees or assignees or insured persons are protected as well, even if they live in another state
What are COvered contracts?
Policies included under the terrrms of the association are called this
