General Insurance Flashcards
Agent/Producer
A legal representative of an insurance company. Producer includes agents and brokers. Agents are agents of the insurer
Applicant or proposed insured
Someone applying for insurance
Broker
An insurance producer not appointed by the insurer and is deemed to represent the client.
Insurance policy
A contract between a policyowner and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
Insured
The person covered by the insurance policy. This person may or may not be the policy owner.
Insurer/Principal
The company that issues the policy
Policyowner
The person entitled to exercise the rights and privileges in the policy.
Premium
The money paid to the company for the policy
Reciprocity/reciprocal
A mutual interchange of rights and privileges
What costs less Term or Whole life?
Term
What can you take a loan from term or whole life?
Whole life
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
What document is required for an insurance company to transact insurance?
Certificate of authority
What is the term for the causes of loss insured against in an insurance policy?
Peril
What type of insurer is formed under the laws of another country?
Alien
What entities make up the medical information bureau?
Insurers
An insurance policy paid a non taxable dividend to the insured one year, and then nothing the next. From what type of insurer did the insured purchase the policy?
Mutual
When would a misrepresentation on an insurance application be considered fraud?
When it’s intentional and material
Wagering on a sporting event is known as what type of risk?
Speculative
If an applicant does not receive his or her insurance policy, who would be held responsible?
The agent
An insurance co is domiciled in California and transacts insurance in Nevada. What is the insurers classification in Nevada?
Foreign
An applicant conceals relevant health information on the application. The applicant presents what type of hazard?
Moral
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agents
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
In insurance, when is the offer usually made on the contract?
When the application is submitted
An insurance company formed under the laws of another state is known as what type of co?
Foreign
What type of risk is insurable?
Pure
Who owns stock companies?
Stockholders
What do individuals use to transfer their risk of loss to a larger group?
Insurance
The insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
The type of co that is organized to return surplus $ to the policyholders?
Mutual company
4 elements of an ins contract
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
LACC
Legal purpose
Agreement (offer and acceptance)
Consideration
Competent parties
What type of report provides info about the applicants hobbies habits and financial status?
Inspection report
2 elements necessary for a life ins policy to have legal purpose
Insurable interest and consent
If an insurer meets the states financial requirements and is approved to transact business in the state it is considered what type of insurer?
Authorized
Five characteristics of an ideally insurable risk
Loss must be
- Due to chance
- Definite and measurable
- Statistically predictable
- Not catastrophic
- Coverage cannot be mandatory
What is the best way to handle incomplete applications?
Send it back to the applicant to finish it
Situation where the person can only experience loss and no gain is what type of risk?
Pure
What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the insurance contract is based
The reduction, decrease or disappearance of value of the person or property insured in a policy is known as what
Loss
What are the three type of hazards?
Physical, moral, and morale
3 types of agent authority
Express, implied and apparent
When agents act within the scope of their contract, their actions will be assumed to be the actions of whom?
Insurer
Conditions that increase the chance of loss are known as what?
Hazards
For the purpose of insurance, what is risk?
Uncertainty of loss
If the agent fails to obtain a signature on the application what should he do?
Send it back for a signature
When risks with higher probability of loss are seeking insurance more often than the other risks this is known as what?
Adverse selection
What is the term for causes of loss?
Peril
Strategies used by underwriters to prevent adverse selection
Restriction of coverage, refusal to accept risk, accepting a risk at a higher rate
When a change needs to be made on an application what should be done?
Start a new application or initial where the changes are
When is the offer usually made on the contract?
When the application is submitted
What are the three types of insurers by domicile?
Domestic, foreign, and alien
In the agent/insurer relationship, who is considered the principal?
The insurer
Whom does an insurance agent represent?
The company
According to the law of agency, a principal is represented by whom?
Agent or producer
Insurance is a contract that protects the insured from what?
Loss
An applicant conceals relevant health information on the application, this is what type of hazard?
Moral
A person who doesn’t lock their doors and shows an indifferent attitude is what type of hazard?
Morale
Who manages a reciprocal insurance company?
Attorney in fact
Can a producer be personally viable if they violate the producers contract?
Yes
Are independent producers insurance company employees?
No
What authority does the producer have that is written into their contract?
Express authority
Does consideration on a policy need to be equal?
No
Principle of indemnity
Purpose of insurance is to restore the insured to the same position before the loss occurred
Warranty
sworn statement guaranteed to be true
What 2 Perils does health insurance cover?
Accident and sickness
Nonoccupational vs Occupational
Occupational covers on and off the job. Non is off the job only
Hospital indemnity pays a stated or variable amount?
Stated amount
Blanket disability policy written for
passengers on common carrier, employee group, student group, debtor group, sports team
What increases the chance of loss?
Hazard
What is a cause of loss?
Peril such as a fire
Law of large numbers allows insurers to predict claims
More accurately
Will insurers buy insurance to protect themselves?
Yes
Are insurance laws uniform from one state to the next?
No
Are dividends from stock insurers guaranteed?
No
An unincorporated association of individuals who insure each other
Reciprocal insurer
The government offers insurance based on
Social needs like flood insurance and workers comp but not for the purpose of preventing fraud
A foreign company has their office where
Another state
