Flash Cards 73
Describe the Needs Approach.
Determining the amount of life insuranc a person needs by using her specific financial goals and objectives
Which valuation approach measures a person’s potential future earnings to determine the amount of life insurance needed?
The human life value approach
The insurer assumes the risk in an insurance policy since it receives a
The insurer assumes the risk in an insurance policy since it receives a premium.
Which type of insurer is owned by its policyholders?
A mutual company
Define blackout period.
The time period from the insured’s death until the surviving spouse is permitted to receive retirement income benefits
What is implied authority?
Authority not specifically defined in the contract but considered to be an extension of regular duties
True or False: The expense factor in the gross premium is based on what the insurer pays for operating expenses.
True
True or False: Extra charges may apply if the premium is paid on other than an annual basis.
True
Name four independent insurance rating services.
1) A.M. Best Review
2)Moody’s Investment
3) Standard and Poor’s
and
4) Weiss Research
True or False: A foreign insurer is authorized in a state, but its principal office is in another country.
FALSE
A foreign insurer has its principal office in another state.
When a life insurance death benefit is paid, it creates an _
When a life insurance death benefit is paid, it creates an estate.
An exclusive agency employs _______
agents who agreed to market products of ________ insurer.
An exclusive agency employees, INDEPENDENT AGENTS
who agreed to market products of
ONE INSURER.
Who do agents represent?
The insurer that sponsors them
True or False: Insurable interest must exist when a life insurance policy is issued.
True
What are the two major approaches used to determine the amount of life insurance needed?
Human life value and needs approach
For how long may an agent be
imprisoned for making statements that jeopardize the solvency of an insurer?
15 years (per Federal Regulation 18, USC
Who manages a reciprocal?
An attorney-in-fact
What term describes a business that assumes the total risk of potential losses?
Self-insured
Explain the concept of actual or express authority.
When an agent’s authority is defined in the agent’s contract.
Who are the owners of a stock company?
Its stockholders
What must exist for an individual to purchase life insurance on another individual?
Insurable interest
True or False: The most common method of managing risk is to transfer risk.
True
The insurer seeking reinsurance is the ________insurer, while the insurer
assuming the risk is the____________
The insurer seeking reinsurance is the CEDING INSURER,
while the insurer assuming the risk is the
REINSURER.
“The greater the number of lives insured, the more predictable losses will be,” is attributable to what law?
The law of large numbers
