Random Definitions of Life Insurance Flashcards
Producer/Agent
They are the same they are legal representatives of the insurance company
Insurer/Principle
This is the insurance company that issues the policy
Agent Contract
The contract the agent signs when working for an insurance company
Insurance Policy
This is a contract between the owner or the insured
Insured/Applicant
The insured or the applicant is anything of value if something happens to the insured the policy/insurer will protect it’s family.
Seeking and Application
This is considered an offer.
When the policy is issued this is considered what?
This is called Acceptance.
Consideration
equals MONEY; equals premium payments and also pays for loss of claim
Legal Purpose
The contract must be legal it must NOT be against public policy
Aleatory Contract
An unequal exchange it pays small premium while the insurance pays large lump sum amounts
Application
This constitutes the whole policy.
Contract of Adhesion
One person prepares the contract and the other party must accept this is a take it or leave it contract there is no negotiation of this.
Risk Selection Classification
The risk is the individual that is trying to get insurance.
Underwriting
Is when and insurer determines whether or not an applicant is insurable and what premium to charge.
Insurable Interest
1 - When a person buys insurance the policy holder must face the possibility of loosing something of value. 2 - Potential for loss. 3 - Exist between the policy owner and the insurer. 4 - This can be between a family, key employee and your own life.
Underwriting Sources
The first source is APPLICATION.
Agent Report
The first hand observation the agent writes down everything they have observed.
Inspection Report
This is when the agent report raises a RED Flag from observation they are sent into investigate the client.
Fair Credit Reporting Act
This protect the consumer / applicant it insures that the records are accurate and confidential. Violation of this is 2YEAR. Knowingly violating this is $2,500 PENALTY.
Consumer Report
This is the credit report / public records / reputation / and habits.
Investigative Report
The report will allow them to investigate you be asking friends family and neighbors.
Medical Information Bureau (MIB)
It give physical examination and this is also a non-profit. The insurance company will use MIB as a source of underwriting to find out about the impermeant medical information on an applicant.
Medical Examination
This is a physical examination and an attending physician statement.
Medical Examination
The insurance company will pay for the exam cost or the insurer will pay the cost.
Indemnity / Indemnified
This is REIEMBURSMENT.
HIPPA
Health Insurance Portability and Accountability Act - This is a federal law that protects private health information.
Risk Classification
This determines whether the applicant will pay higher or lower premiums.
Preferred Risk
This is an applicant at its peek health condition. They have great health condition.
Standard Risk
Majority of people.
Substandard Risk
People that are more at risk due to family history and pays a higher premium. They make higher payments because the have below average health conditions.
Declined Risk
They have NO insurable interest the applicant is deemed unhealthy.
(STOLI) Stranger Originated Life Insurance
This is a forbidden policy. If you have an suspicion of this report it ASAP. Someone trying to write a policy on someone that they do not know.
(IOLI) Investor Owned Life Insurance
This is the same as STOLI. Major RED FLAG. Report this ASAP.
Delivering the Policy
Once the policy is mailed out it is considered DELIVERED. It is advisable to obtain a delivery receipt. Personal DELIVERY is the BEST WAY. Upsell comes with delivering the policy. Also, explain the policy once delivered.
Buyers Guide
This is generic and is also general information. You ALWAYS want to explain the buyers guide.
Policy Summary
This is an overview of the policy.
Policy
Policy will not be in effect until premium is collected. Obtain a statement of good health.
USA Patriot Act
This FIGHTS to prevent terroristic activity.
AML (Anti-Money Laundering Program)
This prevents FRAUD.
Fenced In Program
Another program that prevents FRAUD.
SAR (Suspicious Activity Report)
Must report money deposits over $5,000- $10,000 this also prevents money laundering. MUST File within 30 Days of discovering suspicious activity.
