Life Angent pt 2 Flashcards
Insurance is defined as the transfer of ___
risk
transfer of PURE risk to the insurance company in consideration for a premium.
Insurance
What kind of risk is the chance of loss without any chance of gain
Pure
What kind of risk is the possibility for gain or loss and is not insurable.
Speculative
the chance of loss
Risk
A condition that could result in a loss
Exposure
Leaving matches within reach of a child is a ______
hazard
something that increases the
chance of loss
Hazard
a cause of loss, such as fire.
Peril
Losses must be ______ to be insurable
calculable
The _________ allows insurers to predict claims more accurately.
law of large numbers
The _________ applies to groups of people, not to individuals. The more people in the
group, the more accurate the predictions are.
law of large numbers
What makes the law of large numbers more accurate in the predictions?
more people in a group
Why do most insurers buy reinsurance?
to protect themselves in the event of a catastrophic loss
True/False: Insurance laws are not required to be uniform from one state to another
True
True/False: Insurance laws are required to be uniform from one state to another
False
Can a minor enforce the contract against the insurer?
Yes
Can insurers enforce a contract that they enter into with a minor?
No
Is it guaranteeed if a stock insurer may pay dividends to its shareholders (stockholders)?
No
The government does not offer insurance for the purpose of preventing ______.
fraud
The government offers insurance primarily based upon what needs?
social needs, such as flood insurance and workers compensation
What company has their home office in another state?
Foreign
What company is an insurer based in Canada who sells in the U.S.?
Alien
_________ represent the insurance company, not the insured
Agent/Producer
Who may personally liable when violating the producer’s contract?
Agent/Producer
What types of authority does the producer have?
express, implied and apparent authority
The authority a producer has that is written in his or her contract
Espress authority
The authority in the producer’s contract with the insurer the producer represents.
Binding/Apparent authority
The authority not expressly (written) granted, but is actual authority the producer has to transact normal business activities
Implied authority
The elements of a legal contract
C-O-A-L (consideration, offer, acceptance, legal purpose and legal capacity).
A requirement for a valid contract is
offer and acceptance, or mutual agreement
A specific and definite proposal to enter into a contract is
Offer
Does the consideration on a policy need to be equal?
No
True/False: A policy may not be voided due to unequal consideration
True
True/False: A policy will be voided due to unequal consideration
False
Under what clause must something of value must be exchanged?
Consideration
Under what contract must the outcome depend upon chance?
Aleatory
The doctrine of _______ states that policy ambiguities always favor the insured
adhesion
Another word for Insurance policies
unilateral contracts
A contract where one party makes an enforceable promise the insurer
unilateral contracts
the purpose of insurance is to restore the insured to the same position as before the loss occurred
indemnity
The doctrine of ________ states that all parties to an insurance transaction are honest
utmost good faith
the truth to the best of one’s knowledge
Representation
a sworn statement of truth, guaranteed to be true.
Warranty
the failure to disclose a material fact.
Concealment
When an insurer voluntarily gives up the right to obtain information that they are entitled to
Waiver
_______ must exist at the time of application, but not necessarily at the time of a claim
Insurable interest
_______ may be based on economics or family relationships
Insurable interest
What exists if someone would benefit if another person continues to live?
Insurable interest
Buying a life insurance policy creates ______ _______
immediate estate
When life insurance is used to pay estate taxes
estate conservation
What kind of contract is between the life insurance policyowner and a third party?
Life settlement
A person who seeks to sell his or her life insurance policy in a viatical settlement
Viator
created to establish what a family would lose in income upon the death of the sole or chief income provider
human life value approach
The ______ approach to life insurance does not consider future earnings
needs
