Sec.2 - Ch. 2: Insurance Policy & Company Selection Flashcards
What is the Capital Utilization Life Insurance Needs Analysis?
It is a calculation that factors annuitization to fund future income needed but leaves NO money at the end of the anticipated distribution period
- You calculate the present value of a future need
What is the Capital Retention/Preservation Life Insurance Needs Analysis?
The method that presumes that only interest is distributed
- The original capital is still left at the end of the income period
- THIS IS NOT A TVM CALCULATION
What are participating policies?
A policy that pays annual dividend to the policy holder
- Charges larger premiums (willful overcharge), and the extra not needed premium gets returned to the policyholder as a dividend (generally tax-free)
When researching a insurance company which rating service is best?
A.M. Best is the only one that provides historical data on insurance carriers
- Their highest rating is A++
What is underwriting?
The process of selecting and classifying exposures
What are the 5 sources of information needed by underwriters?
- An application for insurance
- Information form the agent or broker
- Investigations
- Information bureaus
- Physical examinations or inspections
Who is an adjuster and what is their process?
An adjuster determines the insurer’s liability and the amount of benefit
1) Notice of loss: This notice is given by the insured to the insurer
2) Investigation: Needs to determine there is a loss and if the loss is covered by the policy
3) Proof of loss: needs to be signed
4) Payment or denial
When is Insurance Utilization/Coverage best?
When risks are high severity and low frequency
What is tort?
A wrongful act other than a breach of contract for which a civil action may be brought against the tortfeasor
What is a Intentional tort?
A deliberately perormed act such as assault, battery, libel, slander, or false arrest
What is Unintentional Tort?
Negligence or carelessness
What is attractive nuisance?
A situation in which a high degree of care is imposed on the land occupier for certain conditions on the land(ex: pool that isn’t screened/fenced, vacant land where children play)
What is Negligence Per Se?
A situation where the standard of care is set by a statute(ex: school zones/crosswalks)
What is strict liability?
Generally limited to manufacturers and distributors of products found to be defective(ex: romaine lettuce with e. coli bacteria)
What is absolute liability?
An extra hazardous condition which results in losses to others (es: keeping wild animals)
- Workers compensation falls under this
