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Credit Insurance 2021 > Insurance Regs 10% > Flashcards

Insurance Regs 10% Flashcards

1
Q

Democratization of Credit

A

A bank should be willing to lend money if the borrower could show good character and the earning power to repay their debt

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2
Q

Creditor

A

Lender

Usually the beneficiary in credit insurance programs

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3
Q

Debtor

A

Person requesting to borrow money or lease from the creditor

The policy holder and person insured in credit insurance policies

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4
Q

Credit Insurance

A

Protects the lender from the borrowers inability to repay their loan.

Guarantees the repayment of a lenders loan and can generate a commission for the producer

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5
Q

Closed End Credit Transaction

A

When a borrower borrows a certain amount of money for a specified period of time.

Examples:
Car loans
Personal Loans
Mortgages

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6
Q

Open Ended Credit Transactions

A

A loan in which the amount of the credit extended can be increased at any time.

Has a cap or upper limit

Examples:
Home Equity Lines of Credit (HELOC)
Credit Cards

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7
Q

Proof of Insurance

A

Certificate of insurance that must be delivered to the insured debtor within 30 days of incurring the debt

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8
Q

Credit Life

A

Pays off the total unpaid indebtedness that is due to the creditor and no more

Term must not extend more than 15 days beyond maturity date of loan

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9
Q

Joint Credit Life

A

Coverage for two individuals on one loan and pays off the balance after the first death

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10
Q

Group Credit Life Eligibility

A

Under 70 yrs old and they must sign a waiver of good health.

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11
Q

Post Claim Underwriting

A

Determining that an individual does not meet underwriting requirements after the receipt of a claim and voiding or denying coverage on that basis.

Illegal in Micigan

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12
Q

Gross Indebtedness

A

> Total remaining principal, insurance premiums, and scheduled interest charges on a loan.
The total remaining financial obligation

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13
Q

Net Payoff

A

insurance will payoff the net indebtedness of the loan which is the total owed at that given time.

Does not payoff delinquent payments or late fees

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14
Q

Single Premium Mode

A

The premium for insurance coverage is added to the principal of the loan that is being financed

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15
Q

Monthly Outstanding Balance

A

Used on revolving, open-ended credit where the premium for insurance is collected monthly based on the outstanding balance at the end of that month

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16
Q

Term insurance

A

Gives an insured temporary death protection for a period of time

17
Q

Decreasing term Insurance

A

Insurance used to payoff loans where the principal balance will decrease over time, ie, a mortgage.

The premium, payment amount, stays the same, but the benefit, amount of coverage, decreases
aka
Mortgage Cancellation Insurance

18
Q

Level Term Insurance

A

The premium and the benefit amount stays the same over the life of the policy

19
Q

Joint Credit Life

A

Covers the life of more than one debtor with a single policy

20
Q

Truncated Life

A

Policy that provides protection for less than the term of indebtedness

21
Q

Suicide Provision

A

Death benefits not payable due to suicide for the first two years

22
Q

Disability Income Insurance

A

Pays a designated monthly amount to the beneficiary (creditor) if the borrower becomes disable due to accident or sickness and is unable to pay on their loan

23
Q

Own Occupation

A

Definition used in Disability insurance when a person is unable to perform the duties of his or her trade.

A surgeon who loses the usage of his hand

24
Q

Any occupation

A

Definition used in Disability insurance when a person is not able to perform the duties of any occupation which they have the skill and know how to perform

a mechanic who loses his hand can still work in sales but cannot do either if he cannot walk

25
Q

Permanent and total Disability

A

If a borrower is considered permanently and totally disabled then the insurance company will pay off the total due on their credit product minus and late fees or delinquent charges incurred prior to the insured becoming disabled

26
Q

Elimination Period (EP)

A

A waiting period between the time when an individual is first considered disabled to the time when the insurance company begins to draft benefit payments on their behalf.

Just like when you get in an auto accident you have a deductible, the elimination period is a time deductible for the insurance company. It stops frivolous short term claims.

If the insured satisfies the ep and goes on disability then back to work and is off on a second disability, the ep starts over again

27
Q

Probationary Period

A

Period of time between when an insured individual first gets their insurance policy and when they are able to use their new insurance to receive benefits.

Only one Probationary Period must be satisfied per insurance policy

28
Q

Disability Payments

A

Closed end Loans- the required monthly payment

Open ended Loans- The minimum payment due

29
Q

Critical Period Disability Coverage

A

Coverage offered for the life of the loan but with benefits limited to a specified number of monthly payments or the remaining periods if less

30
Q

Truncated Disability Coverage

A

Coverage offered during a portion of the term of the loan.

Benefits are paid only if the disability occurs during the term of coverage.

Monthly benefits payments continue only until the end of the term of insurance

31
Q

Disability Exclusions

A
  • Pre Existing Conditions
  • Self-Inflected Injury
  • Pregnancy
  • Aviation for Aviation Students, Military and private Aircraft Pilots
  • War and Acts of War
32
Q

Credit Property Insurance

A

Cancels the debt owed purchased on an insured’s credit if the property is destroyed by specific perils like an accident, theft, flood, or earthquake

33
Q

Guaranteed Automobile Protection (GAP)

A

“Debt Cancellation Policy” provides funds in the event that a borrower suffers a total loss of a vehicle where the loan balance is more than the amount of insurance coverage

34
Q

Mortgage Guaranty Insurance ( PMI)

A

Provides Indemnification to the lender in case a borrower fails to make mortgage payments on their loan.

35
Q

Fair Credit Reporting Act

A

A federal law which regulates confidential, fair and accurate reporting of consumer information

Credit Insurance 2021 (2 decks)

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