Principles of Insurance & General Terms Flashcards
a legal representative of an insurance company
Agent/Producer
a person applying for insurance
Applicant or proposed insured
a person who receives the benefits of an insurance policy
Beneficiary
the amount paid upon the death of the insured in a life insurance policy
Death Benefit
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
Insurance Policy
the person covered by the insurance policy. This person may or may not be the policyowner
Insured
the company who issues an insurance policy
Insurer (principal)
coverage on human lives
Life insurance
the person entitled to exercise the rights and privileges in the policy
Policyowner
the money paid to the insurance company for the insurance policy
Premium
a mutual interchange of rights and privileges
Reciprocity
the uncertainty or chance of a loss occurring
Risk
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
Pure risk
involves the opportunity for either loss or financial gain (i.e. gambling). Not insurable
Speculative risk
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
Exposure
conditions or situations that increase the probability of a loss occurring
Hazard
Physical condition, past medical history or condition at birth such as blindness is a type of _______________ risk
Physical risk
Tendencies towards increased risk based on the character of the proposed insured, an arsonist or liar for example would be a type of ___________________ risk.
Moral risk
Risk arising from a state of mind that causes indifference to loss, carelessness or bad attitude.
Morale
The causes of loss insured against in a policy
Peril
The reduction, decrease, or disappearance of value of the person or property insured, caused by a named peril
Loss
The legal term for intentionally withholding information of a material fact that is crucial in making a decision
Concealment
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
Fraud
the voluntary act of relinquishing a legal right, claim or privilege
Waiver
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
Estoppel
a temporary agreement issued by an agent or insurer providing temporary coverage until a policy can be issued
Binder
Avoidance, retention, sharing, reduction, and transfer are methods of handling ____________
Risk
Transfers the risk of loss from an individual to an insurer
Insurance
Hazards give rise to a ____________
Peril
Agreement; Consideration; Competent parties; and Legal purpose are all components of a _______________________
Legal Contract
__________________: Offer and acceptance
Agreement
___________________: premiums and representations on the part of the insured; payment of claims on the part of the insurer
Consideration
______________________: of legal age, sound mental capacity, and not under the influence of drugs or alcohol
Competent parties
__________________: not against public policy
Legal purpose
