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Insurance Producer > Insurance > Flashcards

Insurance Flashcards

Insurance

1
Q

What is the concept of risk

A

Risk evolves from uncertainty - a condition in which a chance of loss exists

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2
Q

State of Michigan Office of Financial and Insurance Regulation ( OFIR )

A

Regulates all Insurance companies doing business in the state, protects consumers from the Insurance company becoming insolvent ( unable to pay debts owed )

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3
Q

Insurance rating services

A

Ex:

  1. A.M Best Company
  2. Moodts Investor Services
  3. Standard & Poors
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4
Q

Unauthorized Company

A

( Not Licensed )

Not admitted to do business in the state

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5
Q

Authorized Company

A

( Licensed )

Admitted to do business in the state

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6
Q

The major difference between private insurers and government insurers

A

Government insurers rely on tax dollars

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7
Q

Mutual Insurance Company

A

An insurer without permanent Capitol stock, policyholders own the company, dividends may be paid to policyholders.

AKA: Par companies ( Policyholders PARticipate in dividends

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8
Q

Stock Insurance company

A

An insurer with its Capitol stock owned by its stockholders

Non - Par: Policyholders DO NOT participate in dividends

If a dividend is declared it is paid to the stockholders

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9
Q

Difference between Personal and Commercial Insurance policy

A

Personal Insurance Policy - Covers an individual
Ex: Auto Insurance

Commercial Insurance Policy - Covers an entire business ( that could include multiple drivers, multiple vehicles, ect.

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10
Q

Insurance is provided by what 3 main types of companies?

A
  1. Private Commercial Insurers ( for profit companies )
  2. Private Non - Commercial Insurers ( Non - Profit Organizations)
  3. The federal government
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11
Q

Pays off all or some of your loan if you die during the term of coverage

A

Credit Life Insurance

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12
Q

The larger the # of similar risks, the more accurate the prediction of loss

A

Law of Large #’s

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13
Q

4 main types of credit insurance

A

Credit Life

Credit Disability

Credit Involuntary Unemployment

Credit Property

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14
Q

Group credit insurance is covering a group of individuals and the insurer issues a ________ then issues ________ to each person covered

A

Master policy

Certificates of Insurance

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15
Q

When a group credit life policy is issued, the lender is the _________ ?

A

Beneficiary

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16
Q

Mortality Expense

A

The cost of death protection

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17
Q

Elements in insurable risk

A
  1. Loss must be predictable
  2. Loss must be definite
  3. Loss must be due to chance
  4. Loss cannot be catastrophic
  5. Loss exposure must be large
18
Q

Purchasing insurance is

A

Transferring risk

19
Q

The basis for insurance

A

The idea of sharing risk

20
Q

A creditor is also referred to as

A

Lender

21
Q

What are the two types of risk?

A

Speculative Risk and Pure Risk

22
Q

What type of risk is insurable?

A

Pure risk

23
Q

What type of risk involves the chance of winning or losing? ( win - lose situation)

A

Speculative Risk

24
Q

Will only void a life policy during the first two policy years

A

Fraud Incontestable Clause

25
Q

What type of risk creates only financial loss ? ( lose - lose situation )

A

Pure Risk

26
Q

According to federal law, the mortgage insurance will be automatically terminated when the loan is paid down to _____ % of the original property value

A

78%

27
Q

Mutual companies are owned by ?

A

Policyholders

28
Q

Stock companies are owned by ?

A

Stockholders

29
Q

Policyholders DO NOT participate in dividends in what type of insurance company ?

A

Stock Insurance company

30
Q

Policyholders DO participate in dividends in which type of insurance company?

A

Mutual Insurance Company

31
Q

What are the four classifications of risk ( for underwriting ) ?

Define each

A
  1. Standard Risk - An average risk
  2. Substandard Risk - A less than average risk ( high risk )
  3. Preferred Risk - Exceeds the insurers average risk requirements ( low risk )
  4. Uninsurable - Applicant will be denied/declined
32
Q

Define a closed - end transaction

A

Borrowing a certain amount of money for a specific period of time

( has an end date )

33
Q

What are the methods of repayment in closed - end transactions ?

A

Installment payments

Single payment loans

Balloon payment

34
Q

Paying a fixed amount for a fixed period of time.
While the loan is being re - paid, tge credit insurance is reduced then at the time when the loan is paid in full the credit insurance ceases.

A

Installment Payments

35
Q

What type of authority is specific written authorities ( specifically expressed ) in the agency agreement ?
Powers given to the agent is a part of the agency agreement.

A

Expressed Authority

36
Q

What type of authority is powers or duties that may not be covered in the agency agreement but is needed/assumed for the agent to do their job ?

( Authority not necessarily covered in agreement but implied because is needed for agent to do their job )

A

Implied Authority

37
Q

What authority is when the powers are not given by the agency agreement but which a reasonable presume ( it would be apparent the agent has authority?

( covers the relationship between the agen and the customer. The actions and words of the agent are considered that of the company, even if fraudulent in nature, the insurance company is liable.

A

Apparent Authority

38
Q

A borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction.

A

Debtor

39
Q

Does not qualify for a standard premium, and therefore, will generally have to pay an extra premium. The applicant will be classified as __________ usually due to some medical problem.

A

Substandard Risk

High Exposure

40
Q

The concept of risk

A

Risk evolves from uncertainty - a condition in which a chance of loss exists

41
Q

State of Michigan, Office of Financial and Insurance Regulation
( OFIR )

A

Regulates all insurance companies doing business in the state.

Protects consumers from the insurance company becoming insolvent ( unable to pay debts owed )

Insurance Producer (1 decks)

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