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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
Agent
Person representing someone
26
Principal
Person being represented
27
The agent is expected to...
Advocate for and serve the principal
28
Notice to the agent is...
Notice to the principal
29
Payment to the agent is...
Payment to the principal
30
Express Authority
Made clear in writing or conversation
31
Implied Authority
Technically not mentioned but can reasonably be assumed by the agent to exist
32
Apparent Authority
What you make the public think you can do on your principal's behalf
33
Waiver
Relinquishment of a right under a law or contract
34
Estoppel
Prevents a party from exercising a right that has presumably been waived
35
Estoppel can protect a consumer when...
An agent's instructions contradict the insurer's requirements
36
Insurance Brokers
Represent consumers in insurance transactions
37
Brokers are generally not obligated to...
Place business with a particular company
38
Binding
To accept risk on an insurer's behalf
39
Insurance Agent
Represent insurance companies in insurance transactions
40
Agents generally have a...
Legal obligation to only place business with certain insurers
41
Captive Agent
Independent contractor represents one insurer and can only sell/recommend that company's products
42
Independent Agent
Represents multiple insurers and can sell/recommend any of those companies' products
43
Interim Insuring Agreements
Can provide temporary coverage for losses that occur while application is under review
44
Interim Insuring Agreements should only be issued if...
Agent receives a completed application and first premium
45
No interim insuring agreement =
No coverage until policy is delivered
46
Interim insuring agreements are replaced by...
The policy
47
Binder
Provides temporary coverage while policy/application is being issues/evaluated
48
Losses will be covered while Binder is in effect, even if...
Carrier ultimately declines the applicant
49
Conditional Receipt
MIGHT provide temporary coverage while policy/application is being issues/evaluated
50
Losses will only be covered in the interim if...
Carrier would've otherwise accepted the applicant at the same price and no problems with application
51
Product Suitability
Producers must ensure that products and coverage are suitable for the consumers situation
52
Product suitability typically incorporates an...
Initial needs analysis
53
Product suitability likely requires...
Periodic coverage reviews
54
Product suitability applies to...
Agents and Brokers
55
Underwriters
Decide whether to accept the risk posed by an applicant and at what price
56
Application
Contains information about the applicant, the risk associated with the applicant and relevant previous losses
57
Application is often considered part of...
Insurance contract and must be accurate/complete
58
Underwriters use application primarily to...
Evaluate risk
59
Corrections to the application must be...
Initialed by the applicant
60
Unanswered questions must be addressed...
Prior to policy being issued
61
Inspections might involve...
Financial records; credit and background checks; health exams; review of previous loss history
62
Inspections generally require...
Pre-notice to the applicant
63
Fair Credit Reporting Act
Federal law pertaining to consumer data from third parties
64
FCRA: Informs consumer when negative action is taken based on...
Info from third-party reports
65
FCRA: Provide contact info to obtain...
Free copy of the damage report
66
FCRA: Consumer has how many days to receive requested report?
60 Days
67
FCRA: Consumer has the ability to...
Report alleged errors
68
FCRA: Information in credit reports can't be more than...
7 years old; 10 years for bankruptcy
69
Medical Information Bureau
Information reported by insurers on application/underwriting information (not by doctors and not claims data)
70
MIB: Non-profit funded by...
Life and health insurers
71
MIB: Info is on file for...
7 years
72
MIB: Info about insurers that access your records is kept for...
2 years
73
MIB: Access is limited to...
Insurers with a pending application or claim
74
MIB: Consumers can access their info for free every...
Year or when a negative action is taken by an insurer
75
Rate
Mathematical representation of risk posed by the applicant and all similarly situated individuals within the insurer's pool
76
Premium
Rate multiplied by dollar amount of requested insurance
77
Premium might include...
Discounts or other special adjustments
78
Premium Mode
Schedule for payment (annual, monthly, etc)
79
Premium: Fewer installments =
Lower Price
80
Insurer Solvency
Insurer's assets must at least equal its liabilities
81
Insurer solvency is often determined by...
Mandatory financial reports submitted to the DOI
82
Misrepresenting an insurer's financial status is a...
Federal Crime
83
Solvency: Regardless of harm to the public
10 years in prison
84
Solvency: Ultimately harms the public
15 years in prison
85
Independent Rating Organizations
Private companies that indicate an insurer's financial strength
86
Guaranty Funds
State funds intended to pay claims when an insurer becomes insolvent
87
Guaranty funds typically only pay...
Up to a certain amount
88
Guaranty funds do not apply to...
Non-admitted insurers
89
Gramm-Leach-Bliley Act
Federal law with various requirements for financial institutions
90
GLBA: Financial Privacy Rule
Governs collection and disclosure of customers' personal financial info by financial institutions
91
GLBA: Financial Privacy Rule allows consumers to...
Opt-out of certain sharing
92
GLBA: Safeguards Rule
Requires all financial institutions to design, implement, and maintain safeguards to protect customer info
93
GLBA: Pretexting Provisions
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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