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Insurance License > General Basics > Flashcards

General Basics Flashcards

0
Q

Fixed Annuities

A

Contract offering a guaranteed rate of interest and a guaranteed return of principal for the term of the contract

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1
Q

Credit Life

A

Policy to pay off or reduce the balance of a loan or debt in the event of the insured’s death

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2
Q

Group Life

A

Life Insurance provided for members of a group. Normally a group of employees, any group not formed to buy a group policy. Lower cost because of reduction of admin expenses per life. Tax advantages

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3
Q

Insurable Interest

A

Life Insurance policy on someone else’s life

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4
Q

Permanent Life

A

Life Insurance policy including both a death and cash value component

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5
Q

Temporary Life

A

Death protection for a period or term

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6
Q

Universal Life

A

Flexible-premium, adjustable benefit life insurance policy that accumulates account value. Allows insured to change the amount of insurance as needs change

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7
Q

Variable Annuities

A

Issued by Insurance Company giving investor the flexibility to select from a variety of investment fund options. Earnings tax deferred. Agent must be registered with the Financial Industry Regulatory Authority in CA

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8
Q

Variable Life

A

Form of whole life insurance providing death benefits and/or cash values based on a taxdeferred investment protfolio

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9
Q

Insurance

A

Contract to indemnify another against loss

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10
Q

Loss

A

Reduction in the value of an asset

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11
Q

CIC

A

CA Insurance Code developed by the Legislature

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12
Q

CCR

A

California Code of Regulations - Overseen by CA Insurance Commissioner

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13
Q

Risk

A

Possibility (uncertainty) that a loss might occur

The uncertainty about loss that exists whenever more than one outcome is possible

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14
Q

Pure Risk

A

Chance of loss, no possibility of gain

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15
Q

Speculative risk

A

creating a risk offering the opportunity for gain and loss (e.g. gambling)

16
Q

Peril

A

cause of loss

17
Q

Hazard

A

something that increases the risk

18
Q

Moral hazard
Morale Hazard
Physical Hazard

A

Moral - Attitudes and habits of an individual (dishonest)
Morale - indifference or apathy (careless)
Physical Hazard - tangible characteristics of a risk increasing the chance of loss (overweight, risky vocation)

19
Q

Mortality Table

A

How many people in each age group will die this year

Developed by the National Association of Insurance Commissioners

20
Q

Loss Exposure

A

A condition that could result in a loss

21
Q

3 methods of gathering Risk Exposure information

A

1) Application
2) Physical Exam or Inspections
3) Consumer Credit Report

22
Q

Predicting Insurable Risks

A 
Large comparison of homogeneous units
Monetary value of the loss
Uncertainty of loss
Creates an economic hardship
Exclusions - catastrophic perils (e.g. earthquake, hurricane, flood, war, nuclear risks
23
Q

Insurable Event

A

unknown event which may damage a person

24
Q

Insurable Interest

A

someone or thing that would benefit if that person or thing continues to live (personal life, spouse, business, employee)

25
Q

Principle of Indemnity

A

Restores the insured person in whole or in part, to the condition prior to the loss

26
Q

Underwriting

A

examining and accepting or rejecting insurance risks

27
Q

Agent Underwriter

A

front-line or field agent gathering information needed to access risk

28
Q

Home Office Underwriter

A

Person in the office accessing the information gathered and determining acceptability of the risk

29
Q

Adverse Selection

A

Protecting the insurance company from clients taking advantage of the potential of excessive claims.
e.g. 1) Taking a job to qualify for insurance they otherwise would not qualify for, 2) Suicide coverage, 3) Exclusion of catastrophic events

30
Q

Contract Law

A

Agreement between insurer and the insured legally enforceable obligation to make all benefit payments for which premiums have been paid

31
Q

Indemnify

A

Making an insured whole again after a loss

Restoring to condition before loss

32
Q

Rescission

A

Insurer voids an insurance contract due to an intentionally fraudulent omission by the insured of a material fact.

33
Q

Annuity

A

Agreement by insurer to spread out payments over time. Used to liquidate an estate over time

34
Q

Annuitant

A

The party receiving the benefits of an annuity

35
Q

Single premium immediate annuity

A

Lump sum purchase with payouts starting next month

36
Q

Single premium deferred annuity

A

Single investment with payments beginning until an agreed on age

37
Q

Fixed Annuity

A

Fixed rate of return

38
Q

Variable Annuity

A

Monthly payouts during the payout period will change with the market

Insurance License (10 decks)

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