Insurance Ch 2 Flashcards
Wrongful act other than the breach of contract, for which a civil action may be brought against the tortfeasor, generally regarded as a crime.
Tort
A deliberately performed act such as assault, battery, libel, slander, or false arrest.
Intentional tort
Negligence or carelessness
Unintentional tort
The situation in which a high degree of care is imposed on the land occupier for certain conditions on the land. Examples include a pool that isn’t screened or fenced, vacant land, where children play, and land, with access to a river or lake.
Attractive nuisance
A situation where the standard of care is set by statute. Examples include school zones and crosswalks.
The defendant violated a statute enacted for safety purposes; The violation caused the plaintiff’s injury; The act caused the kind of harm the statute was designed to prevent
Negligence per se
Generally limited to manufactures and distributors of products found to be defective.
Strict liability
An extra hazardous condition which results in losses to others.
Example include keeping wild animals and blasting.
Absolute liability
When one person is held responsible for the negligent behavior of another person
Branch manager at the broker dealer who was responsible for the representatives
A manager at the insurance agency who is responsible for the agents
Vicarious liability
If one party recognizes and understands danger in an activity, yet voluntarily chooses to encounter it, another party cannot be held responsible for the injury.
Assumption of risk
Any negligence on the part of the injured party, although slight, defeats the claim. Examples include jaywalking and driving while drunk.
Contributory negligence
Any degree of negligence on the part of the injured party, does not defeat the claim, but is used in some manner to mitigate damages, payable by the other party. Damages are adjusted proportionally.
Comparative negligence
Any contributory negligence of the injured party will not bar recovery of damages if the other party, immediately prior to the accident, had a ________ to prevent the accident, but failed to do so. Example: road rage
Last clear chance
The party negligently pulled out onto the highway in front of another auto. The second auto would still be liable for the accident if there was sufficient time to swerve out of the way, but that second driver failed to see it.
Last clear chance
The jury determined that the injured party was half to blame for her injury. She has awarded half of the damages incurred.
Comparative negligence
The party falls as an extra hazardous situation through dangerous activities.
 absolute liability
The interparty recognized and understood the danger in an activity and voluntarily chose to encounter it; another party cannot be held responsible for the injury.
Assumption of risk
One party is held liable for the acts of another
Vicarious liability
Factors annuitization to fund future income needed, but leaves no money at the end of the anticipated distribution period.
Calculate the present value of a future need.
Capital Utilization
This method of determining life insurance needs presumes that only interest is distributed. The original capital is still left at the end of the income period.
Capital Retention or capital preservation
Disability carriers will typically only issue about ______ of earned income.
50-60%
Long-term care insurance is generally purchased to cover a certain dollar amount per day. Per diem typically range from ______.
$200-$400
True or false: health insurance is standardized by government regulations.
False Although there are certain mandates under the Affordable Care Act, health insurance is not standardized.
Insurance should be used for risks with _____ severity and_____ frequency.
High/low
________ should be used for risks with low severity and low frequency.
______ acts are excluded from a basic liability insurance policy.
Intentional
Some coverage, like _______, may only be needed until retirement, or age 65. Coverage, like _____ , Maybe needed for lifetime or until children have completed college.
Disability/life insurance
A _________ pay an annual dividend to the policyholder, it charges a larger premium. If the extra premium is not needed, it is then returned to the policyholders as a dividend (generally tax-free).
Participating policy
In a _________ policy, the company retains the profits for shareholders
Rating Services
A++ to F
AAA to CCC
Aaa to C
A+ to F
A.M. Best
Standard & Poor’s
Moody’s
Weiss
If a CFP professional wanted to research the background of an insurance company, which rating service with the financial planner review?
A.M. Best. Provides detailed historical data on insurance carriers
The process of selecting and classifying exposures.
Underwriting
The underwriter must complete both of the following activities:
Cover a large number of individual insured so that the ________ works.
Obtain _________ so that there is reasonable equity between the better and poor individual insureds.
Law of large numbers/homogeneity of insureds
