Insurance

Question 1

Negligence per se

Answer 1

Situation where standard of care is set by statute (school zones, crosswalks)

Question 2

Strict Liability

Answer 2

Generally limited to manufactures and distributors of products found to be defective. Examples include Romain lettuce with E. coli bacteria cars found defective.

Question 3

Absolute Liability

Answer 3

An extra hazardous condition which results and losses to others. Examples include keeping of wild animals and blasting.

Question 4

Vicarious Liability

Answer 4

When one person is held liable for the negligent behavior of another person. Examples include a branch manager at the broker dealer who is responsible for the representatives and a manager at an insurance company who is responsible for the agents.

Question 5

Contributory Negligence

Answer 5

Any negligence on the part of the injured party, although slight defeats the claim. Examples include jaywalking and driving while drunk.

Question 6

Contributory negligence

Answer 6

Any degree of negligence on the part of the injured party does not defeat the claim, but it is used in some manner to mitigate damages payable by the other party. For example, in a claim the pedestrian is found 20% negligent, injured party and the drivers found 80% negligent. Damages are adjusted proportionally.

Question 7

Last clear chance

Answer 7

Any contributory negligence of the injured party will not bar recovery of damages if the other party, immediately prior to the accident, had a last chance to prevent the accident, but failed to do so. For example, road rage.

Question 8

Needs Analysis: Capital Utilization

Answer 8

• factors annuitization to fund future income needed, but leaves no money at the end of the anticipated distribution period.
• what’s needed until end of plan, get insurance for that

Question 9

Needs Analysis: Capital Retention (cap pres)

Answer 9

• this method presumes that only interest is distributed. The original capital is still left at the end of the income period.

Question 10

Disability Income insurance

Answer 10

Disability carriers will typically issue only about 50% to 60% of earned income. This may be improved by adding group disability coverage after the individual policy has been issued.

Question 11

Perils

Answer 11

Basic (WHARVES/FLT): windstorm, hail, aircraft, riot, vandalism, explosions, smoke, fire, lightning, theft.

Broad (RAF): Basic + rupture of system, artificially generated electricity and falling items

Question 12

Exclusions to Homeowners Insurance

Answer 12

OPEN WIF: Ordinance of law, power failure, earthquake, nuclear or neglect, war, intentional, flood

Question 13

Business owners policy (BOP)

Answer 13

The business owners policy is for small to medium-size businesses. The normal policy is a package that provides real property contents and liability protection. Professional liability is specifically excluded. The premium is deductible to the business.

Question 14

Malpractice insurance

Answer 14

Appropriate, where the substandard conduct may result in bodily injury, for example, for physicians or dentists

Question 15

Errors and omissions insurance

Answer 15

Appropriate, where the substandard conduct may result in property damage. Such situations include damage to intangible property, such as loss of money professionals who carry errors in admissions and insurance include lawyers, insurance agents, stockbrokers, and financial planers.

Question 16

Health maintenance organizations (HMO)

Answer 16

A wide range of comprehensive healthcare services to a group of subscribers and return for payment and delivery features for a fixed premium.

Disadvantages: having to go through a gatekeeper the subscriber is not covered when he or she uses a provider other than the HMO. Subscribers are required to obtain their care from providers who are affiliated with the HMO.

Question 17

Preferred provider organizations (PPO)

Answer 17

Represent a group of healthcare providers, contracting with insurance companies, third-party administrators, or others to provide medical care services at a reduced fee. PPO’s differ from HMO’s and two major respects:

1) healthcare providers in the PPO are generally paid on a fee for service basis as needed

2) employees are not required to use practitioners or facilities of the PPO. They can go outside of the network, but benefits are generally reduced relative to benefits. Paid for network provided care. For this reason deductibles will be higher.

Question 18

COBRA: the consolidated omnibus budget reconciliation act

Answer 18

Employers, providing group or self funded health coverage are required to offer terminated employees. The right to buy continued health coverage identical. Small companies (fewer than 20 employees for at least half of the prior year) are also exempt from the federal legislation.

Both full and part time are counted to determine whether our plan is subject.

Each part-time employee counts as a fraction of an employee.

1) Termination, change from FT to PT: Up to 18 months
2) Employee’s death, divorce, legal separation or eligibility for Medicare: up to 36 months
3) Loss of dependent status: 36 months