Principles of Insurance & General Terms

Question 1

a legal representative of an insurance company

Answer 1

Agent/Producer

Question 2

a person applying for insurance

Answer 2

Applicant or proposed insured

Question 3

a person who receives the benefits of an insurance policy

Answer 3

Beneficiary

Question 4

the amount paid upon the death of the insured in a life insurance policy

Answer 4

Death Benefit

Question 5

a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Answer 5

Insurance Policy

Question 6

the person covered by the insurance policy. This person may or may not be the policyowner

Answer 6

Insured

Question 7

the company who issues an insurance policy

Answer 7

Insurer (principal)

Question 8

coverage on human lives

Answer 8

Life insurance

Question 9

the person entitled to exercise the rights and privileges in the policy

Answer 9

Policyowner

Question 10

the money paid to the insurance company for the insurance policy

Answer 10

Premium

Question 11

a mutual interchange of rights and privileges

Answer 11

Reciprocity

Question 12

the uncertainty or chance of a loss occurring

Answer 12

Risk

Question 13

situations that can only result in a loss or no change w/no opportunity for financial gain. This is the only risk a carrier will accept

Answer 13

Pure risk

Question 14

involves the opportunity for either loss or financial gain (i.e. gambling). Not insurable

Answer 14

Speculative risk

Question 15

a unit of measurement used to determine rates charged for insurance coverage. The basis of insurance is sharing risk between a large homogenous (similar exposure) group

Answer 15

Exposure

Question 16

conditions or situations that increase the probability of a loss occurring

Answer 16

Hazard

Question 17

Physical condition, past medical history or condition at birth such as blindness is a type of _______________ risk

Answer 17

Physical risk

Question 18

Tendencies towards increased risk based on the character of the proposed insured, an arsonist or liar for example would be a type of ___________________ risk.

Answer 18

Moral risk

Question 19

Risk arising from a state of mind that causes indifference to loss, carelessness or bad attitude.

Answer 19

Morale

Question 20

The causes of loss insured against in a policy

Answer 20

Peril

Question 21

The reduction, decrease, or disappearance of value of the person or property insured, caused by a named peril

Answer 21

Loss

Question 22

The legal term for intentionally withholding information of a material fact that is crucial in making a decision

Answer 22

Concealment

Question 23

The intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract or to deceive or cheat a party

Answer 23

Fraud

Question 24

the voluntary act of relinquishing a legal right, claim or privilege

Answer 24

Waiver

Question 25

legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after they have been waived

Answer 25

Estoppel

Question 26

a temporary agreement issued by an agent or insurer providing temporary coverage until a policy can be issued

Answer 26

Binder

Question 27

Avoidance, retention, sharing, reduction, and transfer are methods of handling ____________

Answer 27

Risk

Question 28

Transfers the risk of loss from an individual to an insurer

Answer 28

Insurance

Question 29

Hazards give rise to a ____________

Answer 29

Peril

Question 30

Agreement; Consideration; Competent parties; and Legal purpose are all components of a _______________________

Answer 30

Legal Contract

Question 31

__________________: Offer and acceptance

Answer 31

Agreement

Question 32

___________________: premiums and representations on the part of the insured; payment of claims on the part of the insurer

Answer 32

Consideration

Question 33

______________________: of legal age, sound mental capacity, and not under the influence of drugs or alcohol

Answer 33

Competent parties

Question 34

__________________: not against public policy

Answer 34

Legal purpose