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insurance broker > Study Cards > Flashcards

Study Cards Flashcards

1
Q

Adverse Selection

A

insuring of risks that are more prone to losses than the average risk

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2
Q

Agent Producer

A

a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer

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3
Q

An applicant or proposed insured

A

a person applying for insurance

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4
Q

Beneficiary

A

a person who receives the benefits of an insurance policy

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5
Q

Death benefit

A

the amount paid upon the death of the insured in a life insurance policy

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6
Q

Fraud

A

intentional misrepresentation or deceit with the intent to induce a person to part with something of value.

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7
Q

Insurance policy

A

a contract between a policy owner and or insured and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

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8
Q

insured

A

a person covered by the insurance policy may or may not be the policy owner

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9
Q

Insurer/principal

A

the company that issues an insurance policy

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10
Q

Lapse

A

policy termination due to nonpayment of premium

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11
Q

Life Insurance

A

coverage on human lives

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12
Q

Policy owner

A

the person who entitled to exercise the rights and privileges in the policy

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13
Q

Premium

A

the money paid to the insurance company for the insurance policy

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14
Q

Insurance

A

is the transfer of risk of loss. The cost of an insured loss is transferred over to the insurer and spread among other insureds.

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15
Q

Insurance transaction (by mail or any other means)

A

Solicitation, Negotiations, Sale (effectuation of a contract of insurance), and Advising an individual concerning coverage or claims

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16
Q

Contract

A

is an agreement between two or more parties enforceable by law

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17
Q

Elements of a Legal contract

A

Agreement-offer and acceptance
Consideration,
Competent parties,
Legal purpose

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18
Q

Offer

A

applicant makes when submitting the application

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19
Q

Acceptance

A

when the insurer underwriter approves the application and issues a policy

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20
Q

Consideration

A

The insurer’s consideration is the promise to pay for losses insured consideration is the payment of premiums and statements on the application. Binding force in any contract and also something of value that each party gives to the other.

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21
Q

Parties to a contract

A

Both parties must be capable of entering into a contract in the eyes of the law. Legal age, mentally competent and not under the influence of drugs or alcohol

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22
Q

Legal Purpose

A

must have both insurable interest and consent. A contract without a legal purpose is considered void, and cannot be enforced by any party

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23
Q

Contract of Adhesion

A

is prepared by one of the parties or insurer and accepted or rejected by the other party or insured on a take-it or leave-it basis

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24
Q

Aleatory Contract

A

is an exchange of unequal amounts or values.

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25
Q

Unilateral Contract

A

only one of the parties to the contract is legally bound to do anything.

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26
Q

Conditional contract

A

requires that certain conditions must be met by the policy owner and the company in order for the contract to be executed and before each party fulfills its obligations

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27
Q

Warranty

A

is an absolutely true statement upon which the validity of the insurance policy depends.

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28
Q

Representations

A

statements believed to be true to the best of one’s knowledge but they are not guaranteed to be true

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29
Q

Misrepresentations

A

are untrue statements on the application

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30
Q

Material misrepresentation

A

is a statement that if discovered would alter the underwriting decision of the insurance company

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31
Q

Intentional

A

material misrepresentations are considered fraud

32
Q

Application

A

are the starting point and basic source of information used by the company in the risk selection process

33
Q

Life insurance producer is a Field underwriter

A

Life insurance producer is the front line of the company

34
Q

Life insurance producer is a Field underwriter

A

Proper solicitation of applicants
Helping prevent adverse selection
Completing the application
Obtaining the required signatures
Collecting the initial premium and issuing the receipt if applicable
Delivering the policy

35
Q

Agent producer report

A

provides the agent’s personal observations concerning the proposed insured

36
Q

Agent and applicant

A

must sign the application and they are required

37
Q

Premium receipt

A

Whenever the agents collect premiums they must issue

38
Q

Conditional receipt

A

The most common and is used only when the applicant submits a prepaid application and I covered early as the date of the application

39
Q

Replacement

A

a practice of terminating an existing policy or letting it lapse and obtaining a new one.

40
Q

Underwriting

A

The process of reviewing applications for insurance and the information on the application

41
Q

Insurable interest

A

when a policy owner purchases insurance and must face the possibility of losing money or something of value in the event of a loss. Must exist at the time of application

42
Q

Insurance application

A

Is the key source underwriters use for information about the applicant

43
Q

Insurance Applicants

A

Must be notified in writing whenever insurers request investigative consumer reports

44
Q

Unknowingly individual

A

violates the Fair Credit Reporting Act is liable in the amount equal to the loss the consumer as well as reasonable attorney fees incurred in the process

45
Q

Willfully

A

violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to 2500

46
Q

Types of Risk

A

Pure-loss only/no financial gain-insurable
Speculative loss or gain/financial gain-not insurable

47
Q

MIB-Medical Information Bureau

A

Is a non-profit organization owned by member insurance companies that were created for insurance companies from adverse selection by high-risk persons

48
Q

Fair Credit Reporting Act

A

Passed in 1970, this act established procedures that consumer reporting agencies must follow in order to ensure that records are confidential accurate relevant, and properly used.

49
Q

Consumer Reports

A

Written and or oral information regarding a consumer’s credit, character, reputation, or habits collected by a reporting agency from employment records credit reports, and other public sources.

50
Q

Investigative Consumer Reports

A

Similar to consumer reports, but also provide information on the consumer’s character, reputation, and habits

51
Q

Investigative Consumer Reports

A

Consumer is advised in writing about the report within 3days and 5 days to provide the consumer with the additional information

52
Q

Paramedical report

A

The insurer may only request and can be completed by a paramedic or a registered nurse

53
Q

Attending Physician Statement-APS

A

The underwriter may require an APS from a medical practitioner who treated the applicant for a prior medical problem

54
Q

Protected Health Information

A

HiPPA regug

55
Q

Privacy Rule

A

Patients have the right to view their own medical records as well as the right to know who has accessed those records over the previous 6 years.

56
Q

Disclosure Authorization Notice

A

When insurers plan to seek and use information from invstigators they must provide the applicant or insured with a written notice

57
Q

Risk

A

The higher the risk the higher the premium

58
Q

Standard risks

A

Are persons who according to a company’s underwriting standards are entitled to insurance protection without extra rating or special restrictions. Representative of the majority of people their age

59
Q

Preferred risks

A

Are those individuals who meet certain requirements and qualify for lower premiums than the standard risk with a superior physical condition

60
Q

Substandard (High Exposure) risk

A

Applicants are not acceptable at standard rates because of physical condition, personal or family history of the disease, occupation, or dangerous habits. Referred to as (Rated) because they could be issued with the premium rated-up. Higher premium

61
Q

Declined risks

A

Applicants who are rejected

62
Q

Stranger-originated life insurance (STOLI)

A

Life insurance arrangement in which a person with no relationship to the insured (a stranger) purchases a life policy on the insured’s life with the intent of selling the policy to an investor and profiting financially when the insured dies.

63
Q

Investor-owned life insurance (IOLI)

A

Where a third-party investor has no insurable interest in the insured.

64
Q

Delivery Receipt

A

When the insurer relinquishes control of the policy owner, the policy is considered legally delivered. However, it is advisable to obtain a signed delivery receipt

65
Q

Buyer’s Guide

A

Provides basic generic information about life insurance policies that contain and limited to language approved by the Department of Insurance.

66
Q

Policy summary

A

A written statement describing the features and elements of the policy being issued
Agent’s full name and home office also premium amounts and surrender values

67
Q

Illustration

A

A presentation or decpiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years

68
Q

Illustration must do

A

Distinguish between guaranteed and projected amounts.
Clearly state that an illustration is not a part of the contract.
Identify those values that are not guaranteed as such

69
Q

If the initial premium is not paid with the application

A

The agent will be required to collect the premium at the time of policy delivery. The policy does not go into effect until the premium has been collected. Agent may also be required to get a statement of good health from the insured

70
Q

If the premium was submitted with the application

A

The policy was issued as requested the policy coverage would generally coincide with the date of application if no medical exam is required, the date of the coverage will coincide with the date of the exam

71
Q

USA Patriot Act

A

Was enacted on Oct 26th 2001. The Act is to address social, economic and global initiatives to fight and prevent terrorist activities

72
Q

Anti-money laundering (AML)

A

Establish through banks, broker-dealers, and other financial institutions

73
Q

Suspicious Activity Reports-SARs

A

Must be in place and designed to identify activity that one would deem sus[icious of money laundering terrorist financing. 5000 or more should be reported

74
Q

Gramm-Leach-Bliley Act

A

Stipulates that in general, an insurance company may not disclose nonpublic personal information to a nonaffiliated third party

75
Q

Gramm-Leach-Bliley Act

A

2 Disclosures: When the customer relationship is established or a policy is purchased and before disclosing protected information

insurance broker (1 decks)

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