Life & Health Insurance Ch. 1

Question 1

The person or entity that has the insurance protection under a policy for a covered loss

Answer 1

Insured

Question 2

Provide Insurance coverage by issuing particular insurance policies or contracts

Answer 2

Insurers

Question 3

Independent sales organization that provide service and distribute insurance policies to consumers

Answer 3

Insurance Agencies

Question 4

Licensed individuals representing an insurance company when transacting insurance business

Answer 4

Insurance Agents or Producers

Question 5

The Commissioner, Director, or Superintendent of Insurance can?

Answer 5

Issue rules and regulations and enforce statutes

Question 6

National Association of Insurance Commissioners (NAIC)

Answer 6

Regulatory organization with no legal authority

Question 7

Who owns a Stock Insurance Company?

Answer 7

Stockholders / Shareholders

Question 8

What type of policies do Stock Insurance Companies issue?

Answer 8

Non-participating policies

Question 9

Who owns a Mutual Insurance Company?

Answer 9

Policyholders / members

Question 10

If a dividend is declared what type does a Mutual Insurance Company receive?

Answer 10

Non-taxable dividend
“return of unused premium”

Question 11

What type of policies do Mutual Insurance Companies issue?

Answer 11

Participating policies

Question 12

What is a Fraternal Insurer?

Answer 12

Usually a non-profit social organization

Question 13

Domestic Insurer

Ex. Insurer organized in NY is domestic to NY

Answer 13

Can only be under the laws of a state in which it is placing business

Question 14

Foreign Insurer

Ex. insurer organized in KS is foreign to NY

Answer 14

Insurer placing business anywhere other than the place it was organized

Question 15

Alien Insurer

Ex. Insurer from Canada is alien to US

Answer 15

Insurer placing business within the US organized in another country

Question 16

What does an admitted/authorized insurer need to transact insurance

Answer 16

Certificate of Authority

Question 17

Fair Credit Reporting Act

Answer 17

Protects the consumer’s right to the privacy of credit and financial information, ensuring all data is confidential

Question 18

When must the Currency Transaction Report be filed?

Answer 18

Cash transaction over $10,000
Wire transaction over $3,000

Question 19

Pre-Notification

Answer 19

Insurer must let consumer know a credit report will be requested

Question 20

Does client receive a copy of the credit report?

Answer 20

No

Question 21

Principle of Indemnity

Answer 21

Designed to restore an insured to the same financial/physical condition which existed prior to the loss without profit or gain

Question 22

Insurable Interest

Answer 22

requires a financial or economic hardship in the event of a loss due to an accident, sickness, or death

Question 23

When must insurable interest exist?

Answer 23

At the time of application

Question 24

Elements of a Legal Contract

Answer 24

Competent Parties
Legal Purpose
Agreement
Consideration

Question 25

Incompetent Parties

Answer 25

Minors (under 16)
Mentally Incompetent
Under influence of drugs/alcohol

Question 26

Agreement, 2 parts

Answer 26

Offer: customer submitting application
Acceptance: approving the application

Question 27

Insured Consideration

Answer 27

Payment of premium

Question 28

Insurers Consideration

Answer 28

Promise to indemnify

Question 29

Contract of Adhesion

Answer 29

Insured has no input making the contract, non negotiable

Question 30

Aleatory Contract

Answer 30

Based on uncertain events
Unequal exchange of consideration

Question 31

Unilateral Contract

Answer 31

Only one party is legally bound
Insured has the right to cancel the contract

Question 32

Conditional Contract

Answer 32

Both parties must perform certain duties to uphold the contract

Question 33

Representations

Answer 33

Statements made by the applicant on the application

Question 34

Material Statement

Answer 34

Statements that impact the acceptance of insurable risk

Question 35

Misrepresentations

Answer 35

False statement contained in the application

Question 36

Warranties

Answer 36

Material statements in the application or stipulations in the policy that are guaranteed true in all respects