Tuesday Class Flashcards
Consideration
Value given in the exchange for the promise to pay the benefit
Insurable Interest
a financial interest in the life of another person. MUST EXIT AT TIME OF APPLICATION
Adhesion Contract:
a contract offered on a “take it or leave it” basis by an insurer
Aleatory contract
contract in which both participating parties exchange unequal amounts
Conditional Contract
agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable
Unilateral Contract
contract which legally binds only one party to contractual obligations after the premium is paid
Buy Sell (Agreement)
contract establishing what will be done with a business in the event that an owner or partner dies
Indemnify
Restore the insured the same condition as prior to loss with no intent of loss or gain
Utmost Good Faith
both parties must want the contract to work
Representations
statements believed to be true to the applicant’s best knowledge
misrepresentation
a lie
concealment
hiding the truth, failure to disclose material facts
warranties
absolute truth
fraud
a lie for financial gain
underwriting
the process
proof of insurability
evidence of a persons physical or mental health, used in assessing whether to accept the persons risk
how premium is decided
Coverage
Health
Aage
Human life Value approach
probable future earnings of the insured using Wages, Inflation, Time value of $$, Years to retirement
Needs of Approach
the predicted needs of the family using DIME
Debt, Income, Mortgage, Expenses
Parts of the application
- General Information
- Medical
- Agents Report
Risk Classifications
- Preferred
- Standard
- Substandard
Preferred
healthier than the standard risk, usually issues policies at a discounted rate
Standard
a normal or average risk, no special conditions are required in the policy
Substandard
a higher risk, requires special conditions included in the policy or policy issued with higher premiums
