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
What is vicarious liability (respondeat superior)?
When one person is held liable for the negligent behavior of another person
What is Assumption of Risk?
If one party recognizes and understands danger in an activity yet voluntarily chooses to encounter it, another party cannot be held responsible for the injury
What is Contributory Negligence?
Any negligence on the part of the injured party, although slight, defeats the claim (ex: jaywalking.drunk driving)
What is Comparative negligence?
Any degree of negligence on the part of the injured party does not defeat the claim but used in some manner to mitigate damages payable by the other party
What is Last Clear Chance?
Any contributory negligence of the injured party will not bar recovery of damages if the other party, immediately prior to the accident, had a last clear chance to prevent the accident but failed to do so (ex: road rage)
If
