General Insurance (flash cards)- ExamFX
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?
Loss
If an applicant does not receive his or her insurance policy, who is help responsible?
The agent
A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?
Morale
An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?
Mutual
Whom does an insurance agent represents?
Insurance company
Wagering on a sporting event is known as what type of risk?
Speculative
If an insurer meets the state’s financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Authorized or admitted
When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
Insurer
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agent’s
A situation in which a person can only experience a loss and no gain presents what type of risk?
Pure risk
What is the term for the causes of loss insured against in an insurance policy?
Peril
In the agent/insurer relationship, who is considered the principal?
Insurer
When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?
Adverse selection
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
What are the strategies used by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer’s classification in Nevada?
Foreign
Insurance is a contract that protects the insured from what?
Loss
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
Conditions that increase the chance of a loss are known as what?
Hazards
What type of risk is insurable?
Pure
What the five characteristics of an ideally insurable risk?
Lost must be
1) due to chance
2) definitely and measurable
3) statistically predicable
4) not catastrophic
5) coverage cannot be mandatory
When a chance needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
An insurance company is formed under the laws of another state is known as what type of insurer?
Foreign
According to the Law of Agency, a principal is represented by whom?
Agent or producer
The insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
What do individuals use to transfer their risk of loss to a larger group?
Insurance
What are the three types of hazard?
Physical, moral and morale
What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion
Who owns stock companies?
Stockholders
What document is required for an insurance company to transact insurance?
Certificate of Authority
What type of insurer is formed under the laws of another country?
Alien
What are the three types of agent authority?
Express, implied and apparent
What is a warranty on an insurance contract?
An absolute true statement upon which the validity of the insurance contract is based
For the purpose of insurance, what is risk?
Uncertainty of loss
An applicant conceals relevant health information on the application. The applicant presents what type of hazard?
Moral
Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, foreign and alien
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
The type of insurance company organized to return any surplus money to its policyholders is known as what?
Mutual company
If an agent fails to the obtain the applicant’s signature on the insurance application, what must the insurer do?
Send the application back to the applicant for signature
What entities make up the Medical Information Bureau?
Insurers
