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Health Insurance License > Unit One > Flashcards

Unit One Flashcards

1
Q

What is the transfer of risk?

A

Insurance

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2
Q

What is the uncertainty/possibility of a loss?

A

Risk

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3
Q

What are the 2 types of risk?

A

Speculative and pure

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4
Q

What is speculative risk?

A

Chance of loss or gain. NOT insurable

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5
Q

What is pure risk?

A

Chance of loss ONLY. Insurable

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6
Q

What is exposure?

A

Risks for which the insurance company will be liable.

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7
Q

What is peril?

A

A cause of loss

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8
Q

What is a hazard?

A

Something that causes an increase in the chance of loss.

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9
Q

What are the 3 kinds of hazards?

A

Physical
Moral
Morale

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10
Q

What is a physical hazard?

A

a hazard that can be seen

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11
Q

What is a moral hazard?

A

A belief that intentionally causing a loss is acceptable

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12
Q

What is a morale hazard?

A

Carelessness

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13
Q

What are the STARR methods of handling risk?

A

Sharing
Transfer
Avoidance
Retention
Reduction

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14
Q

What is a contract (policy in insurance)?

A

An agreement between the insured and the insurer.

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15
Q

Who is the 1st party in a contract/policy?

A

The customer

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16
Q

Who is the 2nd party in a contract/policy?

A

The insurer

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17
Q

What is the Law of Large Numbers?

A

The larger the group, the more accurately losses can be predicted.

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18
Q

What are the CANHAM risk characteristics?

A

Risks that can be insured if they have the following characteristics:
Calculable
Affordable
Non-catastrophic
Homogenous
Accidental
Measurable

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19
Q

What is adverse selection?

A

Risks that have a greater than average chance of loss

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20
Q

What is reinsurance?

A

Insurance for the insurance companies.

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21
Q

Which company is the ceding company in reinsurance?

A

The company buying the reinsurance

22
Q

Which company is the reinsurer in reinsurance?

A

The company insuring the other insurance company

23
Q

What are the 2 kinds of reinsurance?

A

Facultative and Treaty

24
Q

What is Facultative Reinsurance?

A

The reinsurer evaluates each risk before allowing transfer

25
Q

What is Treaty Reinsurance?

A

The reinsurer accepts the transfer according to an agreement called a treaty.

26
Q

What are the characteristics of a Stock Insurer?

A

Publically owned by stockholders
Taxable dividends to stockholders
Issues participating policies

27
Q

What are the characteristics of a Mutual Insurer?

A

Owned by the policyholders
Nontaxable dividend to policyholders
Issues participating policies

28
Q

What are the characteristics of a Fraternal Insurer?

A

Provides insurance and other benefits
must be a member of a society to get benefits

29
Q

What are the characteristics of a Reciprical Insurer?

A

Unincorporated
Members are assessed the amount they have to pay if a loss occurs to any member of the group
Run by an attorney-in-fact

30
Q

What is Lloyd’s Association?

A

Insurance provided by individual underwriters, not companies

31
Q

What is a Risk Retention Group?

A

A liability insurance company created for and owned by policyholders from the same industry.
Ex: care dealers RRG, only care dealers can be policyholders

32
Q

What is a Risk Purchasing Group?

A

A group of businesses from the same industry join together to buy liability insurance from an insurance company.
The RPG is NOT the insurance company

33
Q

What is Self-Insurance?

A

A business that pays its own claims

34
Q

What is residual market insurance?

A

Insurance from the state or federal government

35
Q

What are the 3 classifications of insurance company location?

A

Domestic
Foreginq
Alien

36
Q

What are the 3 classifications of insurance company location?

A

Domestic
Foreign
Alien

37
Q

What is domestic insurance?

A

An insurance company operating in the same state where it is incopporated

38
Q

What is foreign insurance?

A

An insurance company operating in a different US state or territory than the one in which it is incorporated

39
Q

What is alien insurance?

A

An insurance company incorporated anywhere other than the United States

40
Q

What is a Certificate of Authority?

A

the state license for an insurance company

41
Q

What is an admitted or authorized insurance company?

A

One required by the state it’s operating in to have a Certificate of Authority

42
Q

What is a non-admitted insurance company?

A

One not required to have a Certificate of Authority from the state

43
Q

What are surplus lines?

A

Insurance sold by unauthorized/non-admitted insurers, IF on the states approved list of insurers
Can only be sold the certain high-risk insureds
Cannot be sold for a lower rat than licensed/admitted insruers

44
Q

What is a financial strength rating?

A

A financial report card for the insurance company

45
Q

What are the 5 methods of marketing?

A

Independent
Exclusive or Captive
General Agents or Managing General Agents
Directing-writing companies
Direct response, no agent/producer involved

46
Q

What is agency?

A

The authority that allows agents to act on behalf of the insurance company (the principal)

47
Q

What are the 3 kids of Agent Authority?

A

Express
Implied
Apparent

48
Q

What is Express Agent Authority?

A

What the agent’s written contract with the company says

49
Q

What is implied Agent Authority?

A

Authority not written into the contract but that are things agents normally do to sell insurance

50
Q

What is Apparent Agent Authority?

A

Authority to do things that a reasonable person would assume as authority, based on the agent’s actions and statements.

51
Q

What is a fiduciary?

A

A person in a position of financial trust

52
Q

What are the duties of a fiduciary?

A

Promptly sends premiums to the insurer
Is knowledgeable of products
Complies with laws and regulations
No comingling

Health Insurance License (1 decks)

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