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Life Exam > General Insuance Concepts > Flashcards

General Insuance Concepts Flashcards

1
Q

An insurance producer not appointed by an insurer and is deemed to represent the client

A

Broker

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2
Q

A transfer of risk of loss

A

Insurance

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3
Q

The cost of an insureds loss is transferred over to the ______ and spread among other ________.

A

Insurer / insureds

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4
Q

The uncertainty of chance of a loss occurring.

A

Risk

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5
Q

____ risk is the uncertainty or chance of loss occurring.

A

Pure

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6
Q

______ risk involved the opportunity for either loss or gain. And is not ________.

A

Speculative / insurable

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7
Q

Conditions or situations that increase the probability of an insured loss occurring.

A

Hazards.

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8
Q

Individual characteristics such as a pst medical history or birth condition like blindness that increase the chance of loss.

A

Physical hazards

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9
Q

Tendencies towards increased risk. Ie someone who lies on an app.

A

Moral hazard

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10
Q

Increased risk due to a state of mind that causes indifference to loss, such as carelessness.

A

Morale hazards

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11
Q

Causes of loss insured against in an insurance policy.

A

Perils

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12
Q

Insures against the loss and/or damage of property and resulting liabilities.

A

Casualty insurance

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13
Q

A chance that loss will occur.

A

Risk

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14
Q

Increases the probability of loss.

A

Hazard

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15
Q

The cause of loss

A

Peril

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16
Q

A reciprocal insurance exchange is a formal ________ _________ arrangement.

A

Risk sharing

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17
Q

The most effective way to handle risk is to _______ it so that the loss is borne by another party.

A

Transfer

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18
Q

Insurance is the most common method of ________ risk from and individual group to an insurance company.

A

Transferring

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19
Q

Eliminating exposure to loss.

A

Avoidance

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20
Q

Planned assumption of risk through use of deductibles, copays, or self insurance.

A

Retention

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21
Q

When an insured accepts the responsibility for the loss before the insurance co. Pays.

A

Self-insurance

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22
Q

1 reduces expenses and improves cash flow
2. Increases control if claim reserving and settlements
3. Funds losses that cannot be insured

A

Retention

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23
Q

Actions such as installing smoke detectors, annual physicals, or lifestyle changes would be examples of _________.

A

Reduction

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24
Q
  1. Due to chance
  2. Definite and measurable
  3. Statistically predictable
  4. Not catastrophic
  5. Randomly selected and large loss exposure

All elements of _________ ________

A

Insurable risk

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25
Q

Government insurance is funded by _______ and private insurance is funded by __________.

A

Taxes / premiums

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26
Q

Insurance incorporated in this state

A

Domestic

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27
Q

Insurance incorporated in another state

A

Foreign

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28
Q

Insurance incorporated in another country

29
Q

The acts of the agent/producer within the scope of authority are deemed to be the acts of the insurer is representative of what.

A

Law of agency

30
Q

Insurance agents represent the ___________.

A

Insurer (principal)

31
Q

The authority a principal intends to grant to an agent by means of the agents contract. It is written in the contract.

32
Q

Authority thay is not expressed or written in the contract but which is assumed in order to transact business. (Since not every single detail of an agents authority can be written in/spelled out in the written contract.

33
Q

An agent collecting premiums and remitting them to an insurer even though it is not spelled out in the written contract is an example of _______ authority.

34
Q

The assumption of authority based on actions, words, or deeds of the principal. Ie an agent uses insurers stationary.

35
Q

I’m order for contracts to be legally binding they must have what 4 essential elements. (ACCL)

A
  1. Agreement (offer and acceptance)
  2. Consideration
  3. Competent parties
  4. Legal purpose
36
Q

The applicant usually makes the offer when __________.

A

Submitting the application

37
Q

The binding force in any contract. Something of value that each party gives the other. Ie premium payment and promise to pay in event of loss.

A

Consideration

38
Q

To ensure legal purpose of a life insurance policy it must have _________ and ________

A

Insurable interest / consent

39
Q

To restore but not allow an insured to profit from a loss

40
Q

Principle that implies there will be no fraud, misrepresentation, or concealment between the parties.

A

Utmost good faith.

41
Q

Statements that are believed to be true to the best of one’s knowledge but not guaranteed to be true. Ie the answers on Application.

A

Representations

42
Q

Untrue statements on an application that could void the contract.

A

Misrepresentations

43
Q

A statement that if discovered would alter the underwriting decision of the insurance company. If intentional are considered fraud.

A

Misrepresentations

44
Q

An absolutely true statement upon which the validity of the insurance policy depends.

45
Q

Statements made by applicants are usually not considered _________ except in cases of fraud.

A

Warranties

46
Q

Intentional withholding of information of a material fact that will result in an imprecise underwriting decision and may void the policy.

A

Concealment

47
Q

Intentional misrepresentation or intentional concealment if a material fact used to induce another party to make or refrain from making a contract or to deceive or cheat a party. Is grounds for voiding the insurance contract.

48
Q

Insurance owned by stockholder; non-par

49
Q

Insurance owned by policyholders; participating and pays dividends to policy holders

50
Q

Not for profit organization that is NOT an insurer and is formed to provide insurance benefits for members of and affiliated lodge, religious organization or fraternal org.

A

Fraternal benefit society

51
Q

Powers specifically stated in the contract

52
Q

Powers not specifically stated in the contract; but assumed becesssary to conduct insurance business

53
Q

The appearance of a relationship between the Shen and principal based on words or actions

54
Q

Approved by dept of insurance and has certificate of authority.

A

Authorized / admitted

55
Q

No certificate of authority and cannot transact business in the state

A

Unauthorized / non admitted

56
Q

Contact characteristics (AACPU)

A

Adhesion
Aleatory
Conditional
Personal
Unilateral

57
Q

One party prepares the contract; the other lady must accept it as is

58
Q

Exchange of unequal amounts

59
Q

Certain conditions must be met

A

Conditional

60
Q

Between the policy owner and the insurance company

61
Q

Only one party to the contract is legally bound to so anything.

A

Unilateral

62
Q

Ambiguities if the contract are always resolved in favor of the _______.

63
Q

Parties rely on each other for information

A

Utmost good faith

64
Q

Material misrepresentations (if intentional), breach of warranties, concealment, fraud all can do what.

A

Void the contract

65
Q

Voluntary act of relinquishing a legal right

66
Q

Consequence of a waiver

67
Q

Consideration

A

When an insured makes truthful statements on the application and pays the required premium.

68
Q

Granting insurance must not be _______

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