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Health Insurance > General Insurance Health > Flashcards

General Insurance Health Flashcards

1
Q

Agent/Producer

A

a legal representative of an insurance company; the classification of producer
usually includes agents and brokers; agents are the agents of the insurer

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2
Q

Applicant or proposed insured

A

a person applying for insurance

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3
Q

Broker

A

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

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4
Q

Insurance policy

A

a contract between a policyowner (and/or insured) and an insurance company
which agrees to pay the insured or the beneficiary for loss caused by specific events

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5
Q

Insured

A

the person covered by the insurance policy. This person may or may not be the
policyowner

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6
Q

Insurer (principal

A

the company who issues an insurance policy

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7
Q

Policyowner

A

the person entitled to exercise the rights and privileges in the policy

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8
Q

Premium

A

the money paid to the insurance company for the insurance policy

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9
Q

Reciprocity/Reciprocal

A

— a mutual interchange of rights and privileges

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10
Q

Insurance

A

a contract in which one party (the insurance company) agrees to
indemnify (make whole) the insured party against loss, damage or liability arising
from an unknown event.

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11
Q

insurance transaction

A

Solicitation;
Negotiations;
Sale (effectuation of a contract of insurance); and
Advising an individual concerning coverage or claims.

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12
Q

Risk

A

is the uncertainty or chance of a loss occurring. The two types of risks are
pure and speculative, only one of which is insurable

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13
Q

Reinsurance

A

a contract under which one insurance company (the reinsurer)

indemnifies another insurance company for part or all of its liabilities

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14
Q

ceding insurer (reinsurance)

A

The originating

company that procures insurance on itself from another insurer

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15
Q

assuming insurer (reinsurance)

A

The insurance company that takes on the risk

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16
Q

reinsurance treaty

A

When an insurer has an automatic reinsurance agreement between
itself and the reinsurer in which the reinsurer is bound to accept all risks ceded to
it,

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17
Q

Stock companies

A

owned by the stockholders who provide the capital
necessary to establish and operate the insurance company and who share in any
profits or losses. Officers are elected by the stockholders and manage stock
insurance companies. Traditionally, stock companies issue nonparticipating
policies, in which policy owners do not share in profits or losses.

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18
Q

Mutual companies

A

are owned by the policyowners and issue participating policies.
With participating policies, policyowners are entitled to dividends, which, in the
case of mutual companies, are a return of excess premiums and are, therefore,
nontaxable. Dividends are generated when the premiums and the earnings
combined exceed the actual costs of providing coverage, creating a surplus.
Dividends are not guaranteed

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19
Q

Fraternal Benefit Societies

A

an organization formed to provide insurance benefits
for members of an affiliated lodge, religious organization, or fraternal organization
with a representative form of government. Fraternals sell only to their members
and are considered charitable institutions, and not insurers. They are not subject
to all of the regulations that apply to the insurers that offer coverage to the public
at large.

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20
Q

Reciprocals

A

insurance resulting from an interchange of reciprocal agreements
of indemnity among persons known as subscribers, collectively known as a
Reciprocal Insurance Company or Exchange

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21
Q

Risk Retention Groups

A

a liability insurance company owned by its
members. The members are exposed to similar liability risks by virtue of being in
the same business or industry. The purpose of a risk retention group is to assume
and spread all or part of the liability of its group members.

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22
Q

Lloyd’s Associations

A

Lloyd’s is not an insurance company. Lloyd’s provides support facilities for
underwriters or groups of individuals that accept insurance risk.
Lloyd’s associations are a group of individuals who operate an insurance
mechanism using the same principles of individual liability of insurers that Lloyd’s
of London uses, in that each individual underwriter assumes a part of each risk.
Each individual promises to pay a specified amount in the event that the
contingency insured against occurs. Members are liable only for their portion of
the risk and are not bound to assume any portion of a defaulting member

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23
Q

Risk Retention Group

A

is a liability insurance company owned by its members.

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24
Q

A large number of units having the same or similar exposure to loss is known as

A

homogeneous

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25
Q

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

A

Hazards

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26
Q

physical
moral
morale are types of ___________

A

Hazards

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27
Q

individual characteristics that increase the chances of the cause of loss. exist because of a physical condition, past medical history, or a condition at birth, such as blindness.

A

Physical

hazards

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28
Q

tendencies towards increased risk
involve

evaluating the character and reputation of the proposed insured.

hazards refer to those applicants who may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer

A

Moral

hazards

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29
Q

arise from a state of mind that causes indifference to loss, such as carelessness

A

Morale

hazards

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30
Q

the
causes
of loss insured against in an insurance policy

A

Perils

31
Q

defined as the reduction, decrease, or disappearance of value of the person or property insured in a policy, caused by a named peril

A

Loss

32
Q

__________means eliminating exposure to a loss.

A

avoidance

33
Q

________ is the planned assumption of risk by an insured through the use o fdeductibles, co-payments, or self-insurance.

A

Risk Retention

34
Q

is a method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group

A

Sharing

35
Q

____________ would include actions such as installing smoke detectors in our homes, having an annual physical to detect health problems early, or perhaps making a change in our lifestyles.

A

Reduction

36
Q

Risk that are
Due to chance, Definite and measurable, Statistically predictable, Not catastrophic, Randomly selected and large loss exposure are considered to be_________-

A

Insurable

37
Q

A loss that is outside the insured’s control is a risk that is _______________

A

Due to chance

38
Q

A loss that is specific as to the cause, time, place and amount. An insurer must be able to determine how much the benefit will be and when it becomes payable. Is called

A

Defi nite and measurable

39
Q

Insurers need to be reasonably certain their losses will not exceed specific limits. This is covered in the concept of a loss being ________________

A

Not catastrophic

40
Q

There must be a suffi ciently largepool of the insured that represents a random selection of risks in terms of age,gender, occupation, health and economic status, and geographic location

A

Randomly selected and large loss exposure

41
Q

owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.

A

Stock companies

42
Q

Officers are elected by the stockholders and manage stock insurance companies.

A

Stock companies

43
Q

__________issue
nonparticipating
policies, in which policy owners do not share in profits or losses.

A

Stock companies

44
Q

____________ are owned by the policyowners and issue

participating policies

A

Mutual companies

45
Q

a _______________ policyowners are entitled to dividends

A

Mutual companies

46
Q

in the case of mutual companies, are a return of excess premiums and are, therefore,
nontaxable
.

A

Dividends

47
Q

a ___________________ is an organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.

A

fraternal benefit society

48
Q

__________ sell only to their members and are considered charitable institutions, and not insurers.
They are not subject to all of the regulations that apply to the insurers that offer coverage to the public at large.

A

Fraternals

49
Q

A ____________ is insurance resulting from an interchange of reciprocal agreements of indemnity among persons known as subscribers,

A

reciprocal

50
Q

______________ are administered through an attorney-in-fact common to all persons. Subscribers agree to become liable for their share of losses and expenses incurred among all subscribers, and they authorize the attorney-in-fact to manage and operate the exchange.

A

Reciprocals

51
Q

A _______________ is a liability insurance company owned by its members.

A

risk retention group

52
Q

The purpose of a_________ is to assume and spread all or part of the liability of its group members a ____________ may reinsure another _________ liability as long as the members of the second are engaged in the same or similar business or industry.

A

risk retention group

53
Q

_________
is not an insurance company. ________ provides support facilities for underwriters or groups of individuals that accept insurance risk.

A

Lloyd’s

54
Q

_____________ are a group of individuals who operate an insurance mechanism using the same principles of individual liability of insurers that ________ uses, in that each individual underwriter assumes a part of each risk

A

Lloyd’s associations

55
Q

Each individual promises to pay a specified amount in the event that the contingency insured against occurs. Members are liable only for their portion of the risk and are not bound to assume any portion of a defaulting member. Refers to a ___________

A

Lloyd’s associations

56
Q

___________
is a type of coverage that is not readily available on admitted market. Such coverages are marketed through non-admitted insurers who specialize in offering insurance to the high-risk market on an unregulated basis under each state’s _______ laws.

A

Surplus lines

57
Q

While _________ insurers are not admitted, most states require that they be on that state’s “approved” list

A

surplus lines

58
Q

Before insurers may transact business in a specific state, they must apply for and be granted a license or
_______________
from the state department of insurance and meet any financial (capital and surplus) requirements set by the state.

A

Certificate of Authority

59
Q

Insurers who meet the state’s financial requirements and are approved to transact business in the state are considered
______________
into the state as a legal insurer.

A

authorized or admitted

60
Q

Those insurers who have not been approved to do business in the state are considered
_________

A

unauthorized or nonadmitted

61
Q

Most stateshave laws that prohibit unauthorized insurers from conducting business in the state, except through ______ brokers.

A

licensed excess and surplus lines

62
Q

Insurers must obtain a ___________ prior totransacting business in this state

A

Certificate of Authority

63
Q

Insurance companies are classified according to the
____________. Regardless of where an insurance company is incorporated, it must obtain a Certificate of Authority before transacting insurance within the state

A

location of incorporation

domicile

64
Q

A ____________ is an insurance company that is incorporated in this state

A

domestic insurer

65
Q

A __________ is an insurance company that is incorporated in another state orterritorial possession (such as Puerto Rico, Guam or American Samoa)

A

foreign insurer

66
Q

An _________ is an insurance company that is incorporated outside the UnitedStates

A

alien insurer

67
Q

The financial strength of an insurance company is based on _____, __________, __________ (amount of money kept in a separate account to cover debts to policyholders), and _________, to name a few.

A

prior claims experience
investment earnings
level of reserves
management

68
Q

Guides to insurance companies ‘financial integrity are published regularly by the following various independent rating services

A 
AM Best
Fitch
Standard and Poor's
Moody's
Weiss
69
Q

1 independent agent represents several companies
Nonexclusive
Commissions on personal sales
Business renewal with any company

A

Independent AgencySystem/

American Agency System

70
Q 
1 agent represents 1 company
Exclusive
Commissions on personal sales
Renewals can only be placed with the appointing
insurer
A

Exclusive AgencySystem/

Captive Agents

71
Q

General agent-entrepreneur represents 1 company
Exclusive
Compensation and commissions
Appoints subagents

A

General AgencySystem

72
Q

No agents
Company advertises directly to consumers (through mail, Internet, television, other mass marketing)
Consumers apply directly to the company

A

Direct Response Marketing System

73
Q

Branch manager (supervises agents)
Salaried
Agents can be insurer’s employees or independent contractors

A

Managerial System

Health Insurance (14 decks)

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