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Life's Insurance > Gen Ins > Flashcards

Gen Ins Flashcards

1
Q

The chance of loss with NO possibility of gain

A

Pure risk

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2
Q

(gambling) a risk situation that offers the opportunity for gain

A

Speculative risk

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3
Q

a cause of loss

A

Peril

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4
Q

Something that increases the risk

A

Hazard

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5
Q

the attitudes and habits of an individual (character and reputation)

A

Moral Hazards

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6
Q

individual’s indifference (apathy) toward loss. A careless person

A

Morale hazard

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7
Q

The larger the number of separate risks of a like nature combined into one group, the more predictable the number of future losses of that group within a given time period

A

Law of large numbers

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8
Q

condition that could result in a loss

A

A loss exposure

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9
Q

Provides general information about the applicant

A

The application

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10
Q

reveals hazards related to the health of the applicant or the use

A

Physical Examination

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11
Q

include information about the applicant’s finances, background, habits, and reputation

A

Consumer credit reports

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12
Q

risks are not considered insurable unless the insurance company has a large enough number of similar risks and knows enough about its previous loss experience to be able to predict the future reliably

A

Large number of homogenous units

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13
Q

The insurer must be able to place a monetary value on the loss

A

loss must be ascertainable

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14
Q

being unable to predict what is going to happen to the individual exposure unit

A

Loss must be uncertain

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15
Q

The nature of the loss must be such that an economic hardship must occur should that loss occur

A

Economic hardship

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16
Q

catastrophic perils include wars, nuclear risks, and floods. They are excluded from coverage

A

Exclusion of catastrophic perils

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17
Q

a person has an insurable interest in another if they would benefit if that other person continues to live

A

Insurable interest

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18
Q

restores the insured person, in whole or in part, to the condition they enjoyed prior to the loss

A

principle of Indemnity

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19
Q

The process of examining, accepting, or rejecting insurance risks

A

Underwriting

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20
Q

agents are “frontline” or “field” underwriters

A

Agent as underwrite

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21
Q

evaluates and rate the risk based on the information provided in the application as well as Medical Information Bureau (MIB) reports, med exams, physician statements, special questionnaires, inspection reports and credit reports

A

Home office underwriters

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22
Q

when clients, due to a particularly company’s underwriter standards, take advantage of a situation that ends up costing the insurance company money in excess claims.

A

Adverse Selection

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23
Q

employee joins company to take advantage of health benefits because he would not qualify for his own policy otherwise

A

Example

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24
Q

employee pays part of the premium

A

Contributory group

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25
Q

the risk is transferred from an individual to a group

A

Profitable distribution of exposures

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26
Q

the company has a legally enforceable obligation to make all benefits payable for which premiums have been paid

A

Contract law

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27
Q

Civil injury. Most common is neglect: the failure to act as a reasonable person would in the same set of circumstances

A

Tort law

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28
Q

The possibility (uncertainty) that a loss might occur

A

Risk

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29
Q

any ambiguity will be construed in favor of the insured

A

Doctrine of Adhesion

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30
Q

conditions that apply to both parties to the contract

A

Conditional contract

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31
Q

the outcome depends upon chance

A

Aleatory

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32
Q

only one party to the contract, the insurer, makes an enforceable promise to pay a covered claim if the premium has been paid

A

Unilateral

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33
Q

concern an individual insured, not the insured’s property

A

Personal

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34
Q

truth to the best of the client’s knowledge, it is assumed that insurance contracts are entered into in good faith

A

utmost good faith

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35
Q

restores the insured person, in whole or in part, to the condition they enjoyed prior to the loss

A

Indemnity

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36
Q

the written instrument in which a contract of insurance is set forth

A

policy

37
Q

an intentional and fraudulent omission

A

fraud

38
Q

neglect to communicate that which a party knows, and ought to communicate

A

concealment

39
Q

the probable and reasonable influence of the facts upon the party to whom the communication is due

A

materiality

40
Q
  • written or oral
  • may be made at the time of, or before, issuance of the policy
  • altered or withdrawn before the insurance is affected, but not afterwards
A

representation

41
Q

shall not cause or permit to be issued, circulated or used, any statement that is known, or should have been known.
- terms of policy issued by insurer
- benefits or privileges promised
- future dividends payable
- penalties
~ fine not exceeding $25,000
~ suspended the license of such person for not exceeding three years
~ suspended the insurer’s certificate of authority to do the class of insurance in respect to which the violation occured

A

Misrepresentation

42
Q

Six required specifications for all insurance policies

A
  1. parties between whom the contract is made
  2. the property of life insured
  3. the interest of the insured in property insured, if he or she is not the absolute owner thereof
  4. the risks insured against
  5. the period during which the insured is to continue
  6. either:
    * a statement of the premium
    * if the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined and paid.
43
Q

to cancel or void a contract and the return of the parties to the position they would have occupied if the contract had not been made.

A

recission

44
Q

A form on which the prospective insured states facts requested by the insurer

A

Application

45
Q

the agreement between the insurer and the insured

A

Policy

46
Q

a form attached to a policy that modifies the conditions of the policy

A

Rider

47
Q

termination of a contract of insurance mid-term

A

cancellation

48
Q

termination of a policy because of failure to pay the premium

A

lapse

49
Q

the automatic continuation of an insurance policy for another policy period

A

renewal

50
Q

the discontinuation of an insurance policy at its normal expiration date

A

Non-renewal

51
Q

a period of time after premium date during which a policy remains in force without penalty

A

grace period

52
Q

the cost per unit charged by an insurer for insurance coverage

A

rate/premium

53
Q

that portion of the premium paid that the insurer is entitled to for providing insurance coverage

A

earned premium

54
Q

that portion of the premium paid that the insurer is not entitled to.

A

unearned premium

55
Q

a lower expectation of incurring a loss than a standard risk (ex: applicant who doesn’t smoke can expect reduced premium)

A

preferred risk

56
Q

regarded as average and insurable as standard rates.

A

Standard risk

57
Q

regarded as below average (even though they have dangerous occupatiion, may be insured as substandard risk at higher premium)

A

substandard risk

58
Q

requires pre-notification of any possible investigation and post-notification if any adverse underwriting action is taken by the company

A

the fair credit reporting act

59
Q

nonprofit association that maintains medical data on applicants for life or health insurance

A

The Medical Information Bureau (MIB)

60
Q

person is authorized to represent and act for another person corporation

A

agency

61
Q

enters into an agency agreement with one or more insurers

A

an independent produce

62
Q

producers represent single insurer and are obligated to submit business only to that company

A

Exclusive

63
Q

sell insurance directly to insure through their own employees, through the mail or via the internet

A

Direct response

64
Q

agents sell industrial life insurance on which premium is usually collected on weekly basis at the home of the policy holder

A

Home Service

65
Q

a person who is in a position of holding in trust and confidence that affairs of another, especially as it pertains to financial matters

A

fiduciary

66
Q

Explicit, definite agreement

A

express authority

67
Q

is not expressly granted under an agency contract, but it is actual authority the producer has.. by accepting the premiums from the producer, the company has implied that the producer has the authority to conduct this practice

A

Implied Authority

68
Q

the authority a producer seems to have

A

Apparent authority

69
Q

As front line, producers initiate the underwriting process by completing the application, gathering necessary additional information and required signatures, collecting the initial premium, and issuing the conditional receipt. it’s the producer’s responsibility to seek out those applicants that would present the lowest risk to the insurer

A

Producer’s responsibilities

70
Q

pre-select good risks before being evaluated by home office underwriter

A

Pre-selection

71
Q

process where underwriter evaluates and rates a risk based on information in the application as well as other sources

A

Post selection

72
Q

authorized to transact life insurance, accident and health insurance, and life and accident and health insurance

A

life agent only

73
Q

transact insurance coverage for sickness, bodily injury, or accidental death and may include benefits for disability income and 24 hr. care.

A

accident and health agent

74
Q

advises or offers to advise any person insured under, named as beneficiary of, or having any interest in, a life or disability insurance contract

A

Life and disability insurance analyst

75
Q

person authorized to act as a life agent on behalf of a life or disability insurer

A

life licensee

76
Q

entitle the licensee to transact insurance coverage on human lives, including benefits of endowment and annuities and may include benefits in the event of death or dismemberment by accident and benefits for disability income

A

life only

77
Q

entitle the licensee to contract insurance coverage for sickness, bodily injury, or accidental death and may include benefits for disability income

A

accident and health

78
Q

commissioner may decline to issue a license to an applicant if:

A

~ has been refused a license or had a license revoked by any public authority
~ has been convicted of a misdemeanor or felony which involved the misappropriation of money or property.

79
Q

to transact insurance, include any of the following:

A
  1. solicitaition
  2. Negotiation preliminary to execution
  3. execution of contract insurance
  4. Transaction of matters subsequent to execution of the contract and arising our of it
80
Q

person authorized by and on behalf of an insurer, to transact all classes of insurance other than life, disability or health insurance

A

Insurance agent

81
Q

a person authorized to act on behalf of a life insurer or a disability insurer to transact life insurance, accident and health insurance, and life, accident & health insurance

A

a life licensee

82
Q

person who, for compensation and on behalf of another person, transacts insurance other than life, disability or health insurance with, but not on behalf of an admitted insurer

A

insurance broker

83
Q

a natural person employed to aid an insurance agent or insurance broker transaction insurance other than life disability or health insurance

A

Insurance solicitor

84
Q

Any person who transacts insurance w/o a valid license so to act is guilty of misdemeanor punishable by fine not exceeding $_______ or by imprisonment in county jail for period not exceeding _________

A

$50,000, one year

85
Q

insurers are responsible for the acts of their agents

A

Doctrine of agency

86
Q

natural person employed to aid an insurance agent or broker who appointed them.

A

Insurance solicitor

87
Q

type of professional liability that is desired to protect the insured against legal liability resulting from negligence

A

Error and omissions

88
Q

protect producers from financial losses they might incur for giving incorrect advice (or error) or for not providing a client with information regarding an important issue (or omission)

A

Errors and omissions policies

Life's Insurance (6 decks)

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