Chp. 1

Question 1

Life

Answer 1

When you die.

Question 2

Health

Answer 2

Cover medical/ sickness/ injury/ loss of money

Question 3

Annuities

Answer 3

Payments over time

Question 4

Private Insurance Companies

Answer 4

Commercial Insurance Companies funded thru Premiums and selling insurance for profit.

Question 5

Government Programs

Answer 5

funded with taxes serving national and state social purposes

Question 6

What are the 2 types of popular Insurance Companies

Answer 6

Stock Insurance Company and Mutual Insurers

Question 7

Stock Insurance Companies

Answer 7

Can be organized or incorporated under state law. it is owned by STOCKHOLDERS and it shares its profits with stockholders in the form of DIVIDENDS. Is nonpar,

Question 8

Mutual Insurers

Answer 8

Have no stockholders- policyholders own company- owners get dividens- is PAR

Question 9

Non-Participating (NON-PAR)

Answer 9

policyholders are not paid

Question 10

Participating (PAR)

Answer 10

Policyholders get paid

Question 11

Mutualization

Answer 11

The stock company converts to a mutual company

Question 12

Demutualization

Answer 12

The mutual company converts to a stock company

Question 13

Loyd’s of London

Answer 13

Association formed to underwrite and issue insurance where certain items or areas might be uninsurable.

Question 14

Reinsurers

Answer 14

Insure other insurance companies - the insurance company is the ceding company (transferring risk) - Reinsurer assumes the risk

Question 15

Home Service Insurers (HSI)

Answer 15

Industrial insurance sold by home services or debit insurance companies - small face amounts of 1k-2k - collect premiums weekly door to door by agent

Question 16

Service Providers

Answer 16

Offers subscribers benefits for payment of a premium - 2 most common service providers are HMO’s and PPO’s

Question 17

What is an HMO?

Answer 17

Health Maintenance Organization

Question 18

What is a PPO?

Answer 18

Preferred Provider Organization

Question 19

What are some government Insurance programs?

Answer 19

1. Social Security
2. Medicare
3. Medicaid

Question 20

1945 McCarran and Ferguson Act

Answer 20

The federal government has the right to regulate the insurance industry BUT would not if the states ran the industry effectively and adequately.

Question 21

1970 Fair Credit Reporting Act

Answer 21

1. Provides individuals privacy, protection, fair and accurate credit reporting
2. Insurance companies are required to notify applicants of the credit check made on them and allow them access and notification on anything that they find.

Question 22

Insurance producer

Answer 22

can be representatives with a specific company or an Insurance Broker

Question 23

Insurance brokers

Answer 23

Agent who represents several insurance companies

Question 24

Captive Agent

Answer 24

An agent that represents one company.

Question 25

Independent Agent

Answer 25

An agent that represents 2 or more insurance companiers.

Question 26

National Association of Insurance Commissioners (NAIC)

Answer 26

1. Composed of insurance commissioners
2. All 50 states + District of Columbia+ 4 U.S. territories have to be under it
3. Responsible for resolving Insurance regulatory problems
4. Active in formation and recommendations of insurance legislation designed for uniformity from stat to state to simplify the marketing of insurance.

Question 27

State Guarantee Association

Answer 27

1. Protect policy owners if insurance companies go out of business, becomes insolvent, or is unable to pay claims

Question 28

Independent rating services

Answer 28

1. Rates and Grade financial strength and stability of the insurance company.
2. ratings are based on claims, reserves, company profits.

Question 29

What are the 4 Insurance rating companies?

Answer 29

1. AM Best
2. Standard and Poor’s
3. Moody’s
4. Fitch