Q 1-24 Flashcards
Licensing Requirements
18 yrs or older, fingerprinted and cleared by state, take prelicensing class and pass exam, no minimum residency required
Insurance Superintendent / Commisioner / Director
S/C/D of Ins and staff enforce insuranse laws of state
Licenses
Licenses may be suspended for violations of fair practice (rebating, fraud, misrepresentation, forgery, felonies,?) an agent needs 24 hrs approved CE every 2 years including Ethics
Speculative Risk / Pure Risk
Speculative = risk with potential gain or loss, pure = risk with only posibility of loss, only pure risk can be insured
Who has to be lincensed
All persons who solicit insurance sales must be licensed
Methods of Risk Management
Handle risk by: 1. avoid risk, 2. reduce risk, 3. retain risk by paying ourselves, 4. transfer risk by buying insurance
Law of large numbers and Mortality Table
Table used to help determine life expectancy and premiums till age 120, large number theory = more events studied the greater accuracy
Insurance Principal (the company)
law of agency, principal/company is responsible for actions of their agents. At least one peson must be licensed to pay commision
Change of address
Agents, corps, and partnerships must report their change of address within 30 days to the insurance department. Agents may represent more than one company
Agent and Fiduciary Responsibility
A legal representative of the “principal” (company), their acts and knowledge are considered acts/knowledge of company. They are responsible to company and client when money is help on behalf of another
“Consideration”
This requires an exchange of value. The client gives money and accurate honest answers on the application. The company promise to pay benefits. There is no contract if either money or app is missing or incomplete
Unilateral
Insurance is one sided contract - only the company makes an enforcable promise. Customer can drop the company anytime - the company cannot drop the customer
Solicitors
Producers may hire licensed reps to help them sell or service business. They are the agents employee - not the company’s employee. They may hire as many as they want, but the solicitor can only rep one agent.
Essential Features of a legal insurance contract
Requirements are: 2 or more competant parties, legal purpose, promise in exchange for consideration, and offer and accpetance
Contract of Adhesion
Since ins. Co. makes the contract, courts rule against the company if the contract is vague or unclear, any ambiguities in the contract are settled in favor of insured.
Aleatory
Unequal value is given - a small premium may produce a large death benefit
Waiver
Giving up a known right. Ex. Waiver of premium
Total Needs selling concept
How much insurance is needed for: final expenses, paying off mortgage, or other debts, education for children, family income, death taxes?. What do you owe?
Human live value concept
How much a worker represents in earnings. Projecting your income x number of years to retirement - taxes and expenses?. What are you worth?
Living Benefits of life insurance
The cash value of a policy can be used during your lifetime - by loans, or surrenders, or taken as income at retirement
Term insurance
Type of policy that pays death benefit only, no cash value
Decreasing Term insurance
Type of policy that reduces in value over time - often purchased to protect a mortgage. Cheapest policy to cover a decreasing need(debt)
Level Term insurance
Term policy that has some death benefit for its entire coverage period. Some policies premiums will increase yearly (yearly renewable/annual renewable term) to term age
Re-entry Term Policies
This type of term policy permits the insured to pay a lower premium at stated dates if they can prove their medical insurability
