Monday Class

Question 1

Insurance

Answer 1

Contract whereby one party agrees to indemnify another party

Question 2

Face Amount

Answer 2

the death benefit, how much the insured is covered for

Question 3

Premium

Answer 3

a payment

Question 4

Insurer

Answer 4

agent/company that is offering coverage

Question 5

Insured

Answer 5

employee/person who is covered

Question 6

Risk

Answer 6

the uncertainty of a loss

Question 7

Pure Risk

Answer 7

means chance of ONLY loss; is insurable

Question 8

Speculative Risk

Answer 8

involves a chance of loss or gain, not insurable
i.e; Gambling

Question 9

Hazards

Answer 9

events or conditions that increase the chance of a loss

Question 10

Physical Hazard

Answer 10

a physical condition, medical history
i.e; blindness, deafness, diabetes

Question 11

Moral Hazard

Answer 11

a lie

Question 12

Morale Hazard

Answer 12

doing really unsafe things
i.e; speeding, driving reckless

Question 13

Risk Management Techniques

Answer 13

S.T.A.R.R

Question 14

S: Sharing

Answer 14

for a group of individuals or businesses with the same or similar interests to share the losses that occur within that group.
ex: pension plans

Question 15

T: Transfer

Answer 15

most effective way to handle risk, transfer to another party
ex: car insurance

Question 16

A: Avoidance

Answer 16

eliminating exposure to loss

Question 17

R: Retention

Answer 17

self-insured, able to cover cost of the loss yourself

Question 18

R: Reduction

Answer 18

to lessen the possibility or severity of a loss
ex: installing smoke detectors

Question 19

Exposure

Answer 19

is a unit of measure used to determine rates charged for insurance coverage

Question 20

Tort

Answer 20

a wrong, can have legal consequences

Question 21

Unintentional Tort

Answer 21

deliberate act that causes harm to another person (not considered breach of contract)

Question 22

Intentional Tort

Answer 22

negligence

Question 23

Peril

Answer 23

causes of a loss

Question 24

Law of Large Numbers

Answer 24

predicts number of deaths that will happen in a similar group of people. The larger the number the more accurate the prediction

Question 25

Agent/Producer

Answer 25

anyone who sells or ids in the selling of insurance, legally represents the company

Question 26

Captive Agent
Career Agent
Exclusive Agent

Answer 26

works for one company and only sells their products

Question 27

Independent Agent

Answer 27

works for self and sells products for many companies

Question 28

Domestic Agent

Answer 28

licensed in state where they are doing business

Question 29

Foreign Agent

Answer 29

licensed out of the state their doing business

Question 30

Alien Agent

Answer 30

licensed in another country but conducts business in the US

Question 31

Fiduciary

Answer 31

a person of financial trust

Question 32

Appointment

Answer 32

an agent that represents the company

Question 33

Authorized/Admitted

Answer 33

require a license to sell insurance in state they’re in, require certificate of authority

Question 34

Certificate of Authority

Answer 34

license granted by the state insurance authority allowing an insurer the right to conduct business in the state

Question 35

Expressed

Answer 35

powers specifically stated and written

Question 36

Implied

Answer 36

not specifically stated and written in the contract but assumed authority that is needed to conduct business

Question 37

Commissioner

Answer 37

a public official in charge of the states department of insurance, responsible for regulating the insurance industry by enforcing insurance laws
elected every four years by the people, no more than 2 terms

Question 38

Conditional Receipt

Answer 38

type of premium receipt stating after approval of coverage, it will be effective either the date of application (with premium), or the date of medical exam; whichever is later