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IL Life and Health Insurance > Insurance Industry > Flashcards

Insurance Industry Flashcards

1
Q

Stock Insurance Companies

A

Owned by investors who might or might not have insurance from those companies

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2
Q

Mutual Insurance Companies

A

Owned by the policyholders

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3
Q

Participating Policies are typically sold by…

A

Mutual companies

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4
Q

Participating Polices allow the policyholder to receive…

A

Non-taxable dividends

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5
Q

Dividends

A

Return of premium

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6
Q

Non-Participating Policies are typically sold by…

A

Stock companies

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7
Q

Non-Participating Polices do not allow for…

A

Non-taxable dividends

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8
Q

Domestic Insurer

A

Selling and incorporating in the same state

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9
Q

Foreign Insurer

A

Selling in a state but incorporated in another state

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10
Q

Alien Insurer

A

Selling in a state but incorporated in another country

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11
Q

Admitted Insurer

A

Officially allowed to sell in a given state

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12
Q

Admitted insurers can sell regardless of…

A

Being domestic, foreign, or alien

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13
Q

Non-Admitted Insurer

A

Not officially allowed to sell in a given state

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14
Q

Fraternal Benefits Society

A

Non-profit clubs selling insurance solely to their members

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15
Q

Government/Social Insurance

A

MCR for seniors; MCD for the needy; SS for seriously disabled; SS for retirees; Tricare

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16
Q

Reinsurance

A

Insurance for insurance companies

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17
Q

Reinsurance is purchased from…

A

Private insurers or provided by the government

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18
Q

Producers

A

Sell insurance to the public

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19
Q

Producers analyze…

A

Insurance-specific needs of consumers

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20
Q

Producers collect/facilitate…

A

Payment of premiums

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21
Q

Producers provide…

A

Important insurance-related documents to applicants, policyholders, and carriers

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22
Q

Producers facilitate updates to…

A

Coverage or policyholder information

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23
Q

Producers assist…

A

In communication about claims

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24
Q

Agency

A

Legal relationship created when one person represents another

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25
Q

Agent

A

Person representing someone

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26
Q

Principal

A

Person being represented

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27
Q

The agent is expected to…

A

Advocate for and serve the principal

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28
Q

Notice to the agent is…

A

Notice to the principal

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29
Q

Payment to the agent is…

A

Payment to the principal

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30
Q

Express Authority

A

Made clear in writing or conversation

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31
Q

Implied Authority

A

Technically not mentioned but can reasonably be assumed by the agent to exist

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32
Q

Apparent Authority

A

What you make the public think you can do on your principal’s behalf

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33
Q

Waiver

A

Relinquishment of a right under a law or contract

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34
Q

Estoppel

A

Prevents a party from exercising a right that has presumably been waived

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35
Q

Estoppel can protect a consumer when…

A

An agent’s instructions contradict the insurer’s requirements

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36
Q

Insurance Brokers

A

Represent consumers in insurance transactions

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37
Q

Brokers are generally not obligated to…

A

Place business with a particular company

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38
Q

Binding

A

To accept risk on an insurer’s behalf

39
Q

Insurance Agent

A

Represent insurance companies in insurance transactions

40
Q

Agents generally have a…

A

Legal obligation to only place business with certain insurers

41
Q

Captive Agent

A

Independent contractor represents one insurer and can only sell/recommend that company’s products

42
Q

Independent Agent

A

Represents multiple insurers and can sell/recommend any of those companies’ products

43
Q

Interim Insuring Agreements

A

Can provide temporary coverage for losses that occur while application is under review

44
Q

Interim Insuring Agreements should only be issued if…

A

Agent receives a completed application and first premium

45
Q

No interim insuring agreement =

A

No coverage until policy is delivered

46
Q

Interim insuring agreements are replaced by…

A

The policy

47
Q

Binder

A

Provides temporary coverage while policy/application is being issues/evaluated

48
Q

Losses will be covered while Binder is in effect, even if…

A

Carrier ultimately declines the applicant

49
Q

Conditional Receipt

A

MIGHT provide temporary coverage while policy/application is being issues/evaluated

50
Q

Losses will only be covered in the interim if…

A

Carrier would’ve otherwise accepted the applicant at the same price and no problems with application

51
Q

Product Suitability

A

Producers must ensure that products and coverage are suitable for the consumers situation

52
Q

Product suitability typically incorporates an…

A

Initial needs analysis

53
Q

Product suitability likely requires…

A

Periodic coverage reviews

54
Q

Product suitability applies to…

A

Agents and Brokers

55
Q

Underwriters

A

Decide whether to accept the risk posed by an applicant and at what price

56
Q

Application

A

Contains information about the applicant, the risk associated with the applicant and relevant previous losses

57
Q

Application is often considered part of…

A

Insurance contract and must be accurate/complete

58
Q

Underwriters use application primarily to…

A

Evaluate risk

59
Q

Corrections to the application must be…

A

Initialed by the applicant

60
Q

Unanswered questions must be addressed…

A

Prior to policy being issued

61
Q

Inspections might involve…

A

Financial records; credit and background checks; health exams; review of previous loss history

62
Q

Inspections generally require…

A

Pre-notice to the applicant

63
Q

Fair Credit Reporting Act

A

Federal law pertaining to consumer data from third parties

64
Q

FCRA: Informs consumer when negative action is taken based on…

A

Info from third-party reports

65
Q

FCRA: Provide contact info to obtain…

A

Free copy of the damage report

66
Q

FCRA: Consumer has how many days to receive requested report?

A

60 Days

67
Q

FCRA: Consumer has the ability to…

A

Report alleged errors

68
Q

FCRA: Information in credit reports can’t be more than…

A

7 years old; 10 years for bankruptcy

69
Q

Medical Information Bureau

A

Information reported by insurers on application/underwriting information (not by doctors and not claims data)

70
Q

MIB: Non-profit funded by…

A

Life and health insurers

71
Q

MIB: Info is on file for…

A

7 years

72
Q

MIB: Info about insurers that access your records is kept for…

A

2 years

73
Q

MIB: Access is limited to…

A

Insurers with a pending application or claim

74
Q

MIB: Consumers can access their info for free every…

A

Year or when a negative action is taken by an insurer

75
Q

Rate

A

Mathematical representation of risk posed by the applicant and all similarly situated individuals within the insurer’s pool

76
Q

Premium

A

Rate multiplied by dollar amount of requested insurance

77
Q

Premium might include…

A

Discounts or other special adjustments

78
Q

Premium Mode

A

Schedule for payment (annual, monthly, etc)

79
Q

Premium: Fewer installments =

A

Lower Price

80
Q

Insurer Solvency

A

Insurer’s assets must at least equal its liabilities

81
Q

Insurer solvency is often determined by…

A

Mandatory financial reports submitted to the DOI

82
Q

Misrepresenting an insurer’s financial status is a…

A

Federal Crime

83
Q

Solvency: Regardless of harm to the public

A

10 years in prison

84
Q

Solvency: Ultimately harms the public

A

15 years in prison

85
Q

Independent Rating Organizations

A

Private companies that indicate an insurer’s financial strength

86
Q

Guaranty Funds

A

State funds intended to pay claims when an insurer becomes insolvent

87
Q

Guaranty funds typically only pay…

A

Up to a certain amount

88
Q

Guaranty funds do not apply to…

A

Non-admitted insurers

89
Q

Gramm-Leach-Bliley Act

A

Federal law with various requirements for financial institutions

90
Q

GLBA: Financial Privacy Rule

A

Governs collection and disclosure of customers’ personal financial info by financial institutions

91
Q

GLBA: Financial Privacy Rule allows consumers to…

A

Opt-out of certain sharing

92
Q

GLBA: Safeguards Rule

A

Requires all financial institutions to design, implement, and maintain safeguards to protect customer info

93
Q

GLBA: Pretexting Provisions

A

Protect consumers from individuals and companies that obtain personal financial info under false pretenses

IL Life and Health Insurance (29 decks)

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