Life & Health Insurance Ch. 1 Flashcards
Memorize
The person or entity that has the insurance protection under a policy for a covered loss
Insured
Provide Insurance coverage by issuing particular insurance policies or contracts
Insurers
Independent sales organization that provide service and distribute insurance policies to consumers
Insurance Agencies
Licensed individuals representing an insurance company when transacting insurance business
Insurance Agents or Producers
The Commissioner, Director, or Superintendent of Insurance can?
Issue rules and regulations and enforce statutes
National Association of Insurance Commissioners (NAIC)
Regulatory organization with no legal authority
Who owns a Stock Insurance Company?
Stockholders / Shareholders
What type of policies do Stock Insurance Companies issue?
Non-participating policies
Who owns a Mutual Insurance Company?
Policyholders / members
If a dividend is declared what type does a Mutual Insurance Company receive?
Non-taxable dividend
“return of unused premium”
What type of policies do Mutual Insurance Companies issue?
Participating policies
What is a Fraternal Insurer?
Usually a non-profit social organization
Domestic Insurer
Ex. Insurer organized in NY is domestic to NY
Can only be under the laws of a state in which it is placing business
Foreign Insurer
Ex. insurer organized in KS is foreign to NY
Insurer placing business anywhere other than the place it was organized
Alien Insurer
Ex. Insurer from Canada is alien to US
Insurer placing business within the US organized in another country
What does an admitted/authorized insurer need to transact insurance
Certificate of Authority
Fair Credit Reporting Act
Protects the consumer’s right to the privacy of credit and financial information, ensuring all data is confidential
When must the Currency Transaction Report be filed?
Cash transaction over $10,000
Wire transaction over $3,000
Pre-Notification
Insurer must let consumer know a credit report will be requested
Does client receive a copy of the credit report?
No
Principle of Indemnity
Designed to restore an insured to the same financial/physical condition which existed prior to the loss without profit or gain
Insurable Interest
requires a financial or economic hardship in the event of a loss due to an accident, sickness, or death
When must insurable interest exist?
At the time of application
Elements of a Legal Contract
Competent Parties
Legal Purpose
Agreement
Consideration
Incompetent Parties
Minors (under 16)
Mentally Incompetent
Under influence of drugs/alcohol
Agreement, 2 parts
Offer: customer submitting application
Acceptance: approving the application
Insured Consideration
Payment of premium
Insurers Consideration
Promise to indemnify
Contract of Adhesion
Insured has no input making the contract, non negotiable
Aleatory Contract
Based on uncertain events
Unequal exchange of consideration
Unilateral Contract
Only one party is legally bound
Insured has the right to cancel the contract
Conditional Contract
Both parties must perform certain duties to uphold the contract
Representations
Statements made by the applicant on the application
Material Statement
Statements that impact the acceptance of insurable risk
Misrepresentations
False statement contained in the application
Warranties
Material statements in the application or stipulations in the policy that are guaranteed true in all respects
