Chapters 1-4 Flashcards
One party’s agreement to the offer of another party. Usually takes place when the policy is issued.
Acceptance
An unforeseen, unexpected, and unintended event that results in bodily injury
Accident
An Insurance Policy under which benefits are payable in case of illness or accident
Accident and Health Insurance
A policy that provides payment if the insured dies from an accident, accidentally severs a limb, or accidentally and permanently loses eyesight
Accidental Death and Dismemberment (AD&D)
Mathematician hired by an insurance company to apply probabilities and statistical analysis to risks and premiums
Actuary
An insurance company rep who seeks to determine the extent of the company’s liability when a claim is submitted
Adjuster
The tendency of insureds who present a higher probability of loss to purchase or renew insurance more often than those who present a lower probability of loss
Adverse Selection
A person licensed by the state insurance authority to sell insurance products.
Agent
When one party’s offer is accepted by another party
Agreement
A contract condition where only one party may obtain greater value under the agreement than the other party
Aleatory
An insurance company organized and incorporated outside of the US, that is, organized under laws of foreign nation.
Alien Insurer
A person apply for a policy
Applicant
The legal transfer of a policyowner’s rights in an insurance policy to another party
Assignment
Current or present age of insured
Attained Age
A type of policy assignment under which the assignee receives full control over the policy and also full rights to its benefits. It is also called permanent assignment.
Absolute Assignment
To give up a right or privilege
Waiver
A statement that one guarantees to be materially and substantially true
Warranty
The process through which the underwriter evaluates risk and
determines premium category.
Underwriting
An insurance company employee who has been trained to evaluate prospective applicants for insurance policies.
Underwriter
A person who is considered a higher risk due to medical condition, occupation, or dangerous habits/hobbies.
Substandard Risk
An insurance company owned by stockholders
Stock Insurer
A person who is considered average risk
Standard risk
Applicants who cannot qualify for standard insurance rates due to existing health impairments. Policies are issued with rated-up premiums or exclusions riders.
Special Risk Class
Uncertainty of loss
Risk
The responsibility of the underwriter to determine which risks are insurable and acceptable to the insurance company
Risk Selection
A statement that one believes to be materially and substantially to be true
Representation
Stipulations and conditions in the policy that state both the insurance company’s and policyowner’s rights and obligations
Provisions
A person licensed by the state authority to sell insurance products.
Producer
The cost of insurance
Premium
A person who is entitled to a lower premium rate due to an indication of longevity or unimpaired life; such as excellent physical condition or low risk occupation.
Preferred
A company owned by policyholders
Mutual Insurer
Calculated by an actuary using two factors – (1) risk minus (2)
investment income. Loading is not a factor.
Net premium
The incidence or extent of illness, injury, or disability in a defined population
Morbidity
The incidence or extent of death in a defined population.
Mortality
A listing of mortality experience of individuals by age. It permits an actuary to calculate how long a male or female of a given age group may be expected to live.
Mortality Table
Insurance company: deliberate or false representation of the policy, including terms and benefits.
Applicant: a deliberate false representation of the health or other condition of the insured
Misrepresentaion
Nonprofit organization that collects medical data for life and health insurance companies
Medical Information Bureau (MIB)
A mathematical principle of probability stating that actual losses in a given category of inurance will come closer to a predictable number as the number of policies issued increases.
Law of Large Numbers
A fundamental insurance concept in which the insured should not profit, but be restored in part, by payment, repair, or replacement.
Indemnity
A federal law that allows credit for coverage of a preexisting condition when changing from one group plan to another
Health Insurance Portability and Accountability Act (HIPAA)
Social insurance programs such as medicare & medicaid, provided by the state or federal government
Government Insurer
An insurance company organized and incorporated in a state and selling policies to residents of other states.
Foreign Insurer
To deliberately attempt to deceive another for financial gain
Fraud
An insurance company organized and incorporated in a state and selling policies of residents of that state.
Domestic Insurer
A policy owner’s share of divisible surplus paid by a participating policy
Dividend
Extra money resulting from the insurance company’s savings in mortality, interest earnings, and/or reductions in operational expenses which can be divided equitably among the company’s policyholders or stockholders
Divisible Surplus
