Completing The Application, Underwriting, And Delivering The Policy Flashcards
Insuring of risks that are more prone to losses than the average risk
Adverse selection
A legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer
Agent/producer
A person applying for insurance
Applicant or proposed insured
A person who receives the benefits of an insurance policy
Beneficiary
The amount paid upon the death of the insured in a life insurance policy
Death benefit
Intentional misrepresentation or deceit with the intent to induce a person to part with something of value
Fraud
A contract between a policy owner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
Insurance policy
Person covered by the insurance policy; may not be the policy owner
Insured
The company who issues an insurance policy
Insurer (principal)
Policy termination due to nonpayment of premium
Lapse
Coverage on human lives
Life insurance
The person entitled to exercise the rights and privileges in the policy
Policyowner
The money paid to the insurance company for the insurance policy
Premium
Is a transfer of risk of loss from an individual or a business entity to an insurance company, which in turn, spreads the costs of unexpected losses to many individuals. If this mechanism was not in place, the cost of loss would have be borne solely by the individual who suffered the loss.
Insurance
Insurance is the transfer of
Risk
Insureds’ losses are transferred over to the
Insurer
Is an agreement between two or more parties enforceable by law. Because of unique aspects of insurance transactions, the general law of contracts had to be modified to fit the needs of insurance.
Contract
Elements of a legal contract
- Agreement
- Consideration
- Competent parties
- Legal purpose
In order for insurance contracts to be legally binding, they must have 4 essential elements
- Agreement - offer and acceptance
- Consideration
- Competent parties
- Legal purpose
Offer and acceptance
Agreement
The applicant usually makes the _______ when submitting the application.
Offer
Takes place when an insurer’s underwriter approves the application and issues a policy.
Acceptance
The binding force in any contract is
Consideration
Is something of value that each party gives to the other.
Consideration