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Health insurance > Insurance > Flashcards

Insurance Flashcards

1
Q

Insurance

A

transfer of risk.

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2
Q

Risk

A

uncertainty / possibility of a loss

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3
Q

What are types of risk

A

Speculative Risk and Pure Risk

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4
Q

Speculative risk

A

chance of loss or gain. Not insurable

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5
Q

Pure risk

A

chance of loss only. Insurance companies will insure.

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6
Q

Exposure

A

Risk for which the insurance company would be liable.

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7
Q

Peril

A

Cause of loss

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8
Q

Hazard

A

Something that causes an increase in the chance of loss

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9
Q

Physical Hazard

A

the hazard that can be seen

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10
Q

Moral hazard

A

a belief that intentionally causing a loss is acceptable

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11
Q

Morale Hazard

A

Carelessness

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12
Q

Starr

A

Methods of handing risk

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13
Q

What are Starr terms

A

Sharing, Transfer, Avoidance, Retention and Reduction

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14
Q

Insurance

A

Risk Transfer

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15
Q

Contract

A

(policy) an agreement between the insured and the insurer

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16
Q

1st party

A

Insured (customer)

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17
Q

2nd party

A

Insurer (the insurance company)

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18
Q

Law of large numbers

A

Larger the group, the more accurate losses can be predicted

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19
Q

Canham Risks

A

That can be insured have the following characteristics

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20
Q

Canham risks

A

Calculable, Affordable, Non-catastrophic, Homogeneous, Accidental and Measurable

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21
Q

Adverse selection

A

Risk that have a greater then average chance of loss

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22
Q

Reinsurance

A

An insurance company (the ceding company) paying another insurance company (re insurer) to take some of the companies risk of catastrophic loss

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23
Q

Stock insurer

A

pubically owned by stockholders/shareholders If the company makes money, a taxable dividend from the profits may be paid to the stockholders/shareholders. issue non-par policies

24
Q

Mutual insurer

A

Owned by policy holders (customers) if the company is proitable. can return excess premium to its policyholders. nontaxable dividend. issue participating polcies

25
Q

Fraternal Insurer

A

Provides insurance and other benefits, must be a member of the society to get the benefits.

26
Q

Reciprocal insurer

A

Unincorporated, members are assessed the amount they have to pay if a loss to any of the member of the group occurs. Run by attorney in fact.

27
Q

Lloyd’s association

A

Insurance provided by underwriters not companies

28
Q

Risk retention group

A

Liability insurance company created for and owned by policyholders from the same industry

29
Q

Risk purchasing group

A

a group of businesses from the same industry joining together to buy liability insurance from an insurance company

30
Q

Self insurance

A

a business that pays its own claims

31
Q

Residual market

A

insurance from the state or federal government

32
Q

Insurance company locations

A

Domestic =state where company is incorporated
Foreign =any state or Us territory other then the state where incorporated
alien =incorporated in any country other then the USA

33
Q

Certificate of authority

A

state license for an insurance company

34
Q

Admitted or authorized

A

state requires the insurance company to have a certificate of authority

35
Q

Non-admitted

A

unauthorized insurance company not required to have a certificate of authority from the state

36
Q

Surplus lines

A

insurance sold by unauthorized/non-admitted insurers, if the state approved list of surplus insurers. Can only be sold to certain high risk insureds. Cannot be sold just for a cheaper rate then licensed/admitted insurers.

37
Q

Financial strength rating

A

a report card of the company

38
Q

Methods of marketing

A

independent, exclusive or captive. general agents or managing general agents, direct writing companies and direct response no agent/producer involved

39
Q

Agency

A

The insurance agent acts on behalf of the principal (insurance company)

40
Q

Agent authority

A

Express =What the agents written contract with the company says
Implied =not written but are things agents normally do to sell insurance
Apparent =Things the agent does that a reasonable person would assume as authority, based on the agents actions and statements

41
Q

Fiduciary trust

A

Promptly sends premiums to insurer, knowledge of products, comply with laws and regulations and no commingling

42
Q

Legal contract (CLOAC)

A

Consideration giving something of value, insured gives information and money (premium) to the insurance company. insurance company gives a promise to pay(policy) to the insured
■ Legal purpose—risk transfer doesn’t violate the law
■ Offer (made by insured)
–– Insured submits application and first month’s premium to insurer
–– Counteroffer (made by insurer)
■ Agrees to issue policy but with higher premium or restrictions/exclusions
■ Insured either accepts the conditions or withdraws her application
■ Acceptance—insurer accepts risk as presented
■ Competent parties—insured age 18 and sane

43
Q

Adhesion

A

Policy written by insurance company
■ If ambiguous(not clear)—court will take the side of the insured

44
Q

Aleatory

A

not equal value small premium for a large amount of coverage

45
Q

Upmost good faith

A

the insured and insurance company have a right to expect honestly from each other

46
Q

Unilateral

A

Only one promise made, insurance company promises to pay for covered loss insured does not promise to pay premium

47
Q

Personal

A

Contract between the insurance company and the insured, cannot be changed to someone else

48
Q

Conditional

A

Insured must pay the premium for coverage and file a claim if a loss occurs

49
Q

Indemnity

A

pay for the loss but with no gain

50
Q

Representation

A

Believed to be true
Misrepresentation—information given that is not true—however, the correct information
would not affect the insurance companies decision – insured mistakenly gives one number of
their address wrong—doesn’t void coverage
■ Material misrepresentation— information give that is not true—this information DOES affect the
insurers decision—insured has a conviction for driving while intoxicated—could void coverage

51
Q

Warranty

A

A promise
Always made by the insurance company—if promise to pay is broken—company could be sued
by the insured.
■ May be made by the insured—if promise is broken—insured may have no coverage
■ Guaranteed to be true

52
Q

Concealment

A

Failure to disclose
If intentional, and the information is material (important)—coverage could be voided
■ If NOT intentional—coverage cannot be voided

53
Q

Fraud

A

intentional act to cheat another

54
Q

Waiver

A

voluntarily giving up a right

55
Q

Estoppel

A

Actions reasonably relied on by one party can’t be denied by the party that accepted same previously

56
Q

Fraud and false statements

A

Fine and or imprisonment (10-15 years) Embezzlement included

Health insurance (13 decks)

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