Basic Principles of Life and Health Insurance Flashcards

Question

What is a Nonparticipating policy?

Answer 1

This is a policy that's typically issued by stock companies. This type of policy doesn't allow policy owners to participate in dividends or to elect that board of directors.

Answer 2

This is an insurance policy that pays policy dividends to policy owners. By receiving dividends, policy owners share in the company's divisible surplus and also elect the company's board of directors.

Answer 3

This is an agency that represents one or more specific insurers. A PPGA is a similar agency system, but PPGAs don't recruit , train, or supervise career agents.

Answer 4

This is the person who's responsible for the payment of premiums and who possesses all ownership rights of the contract. Typically, the policy owner is also the insured.

Answer 5

This is an insurer that's owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned.

Answer 6

This is an individual who's licensed by one or more states to sell, solicit, or transact insurance in a given state.

Answer 7

This is the person whose life will be covered by an insurance policy

Answer 8

This person acts on behalf of a consumer who's settling an insurance claim

Answer 9

This is an unincorporated organization in which all members insure one another. An attorney-in-fact manages it

Answer 10

This is the acceptance by one or more insurers (referred to as reinsurers) of a portion of the risk being underwritten by another insurer that has contracted with a consumer to cover the entire risk.

Answer 11

This is a company that provides financial protection to insurance companies. Reinsurers handle risks that are too large for insurance companies to cover on their own and make it possible for insurers to obtain more business that they would otherwise be able to obtain.

Answer 12

This is a group-owned liability insurer that assumes and spreads product liability and other forms of commercial liability risks among its members.

Answer 13

Sales Department

Answer 14

This is a company that establishes a self-funded plan to cover potential losses rather than transferring the risk to an insurance company?

Answer 15

These are customer services employees. Service representative are not required to obtain a license because they neither sell nor solicit coverage, and they don't bind coverage.

Answer 16

These are individuals who solicit and schedule sales meetings between consumers and the providers for whom they work. Some states separately license these individuals.

Answer 17

This is an insurance company that's owner and controlled by their shareholders (stockholders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies.

Answer 18

Surplus Lines Insurance

Answer 19

This is a non-admitted insurer.

Answer 20

Underwriting Department

Answer 21

State insurance departments

Answer 22

This is defined as selection against the company or the tendency of people with higher risks to seek/continue insurance to a greater extent than those with little or less risk. This occurs when the percentage of poor risks among those covered by issued policies exceeds the ratio predicted by the actuaries when they designed the policies. This also consists of the tendency of policy owners to take advantage of favorable options in insurance contracts.

Answer 23

This is any factor, condition, or situation (event) that creates an increased possibility that a peril (a cause of a loss) will actually occur.

Answer 24

These are similar "objects of insurance" that are exposed to the same group of perils. An "object of insurance" can be a person, a business, or a piece of property. Each "unit" represents one of many similar risks that are undertaken to be insured by an insurance company.

Answer 25

This is a contract that attempts to return the insured to her original financial position.

Answer 26

This is a fundamental principle of insurance. The larger the number of individual risks that are combined into a group, the more certainty there is in predicting the degree or amount of loss that will be incurred in any given period.

Answer 27

The insurance industry defines the word "loss" as the unintentional decrease in the monetary value of an asset due to a peril.

Answer 28

This is the risk of a possible loss

Answer 29

This refers to each individual, organization, or asset that's exposed to the potential of financial loss due to a defined peril. When loss exposure units are aggregated together, the maximum potential loss expresses the overall loss exposure.

Answer 30

This is the type of hazard that exists because of an effect of an insured's personal reputation, character, associates, personal living habits, or degree of financial responsibility. This also includes criminal activity.

Answer 31

This is a hazard that arises from an insured's indifference to loss because of the existence of insurance. Morale hazards are often associated with having a careless attitude.

Answer 32

The immediate, specific event that causes loss and gives rise to risk.

Answer 33

This is a physical or tangible condition that exists in a manner which makes a loss more likely to occur.

Answer 34

First policy to pay. Reinsurance - primary write a policy to cover a risk in the marketplace, then surrenders a portion of the risk to a reinsurer.

Answer 35

This is a type of risk that involves only the chance of loss only; there's no opportunity for gain.

Answer 36

This is the uncertainty regarding loss.

Answer 37

This is occurs when individuals evade risk entirely. NOT participating in an activity that could possibly cause a loss.

Answer 38

This is the process of analyzing exposures that create risk and then designing programs to address them.

Answer 39

This is the risk management strategy that focuses on taking actions which decrease the chances of a loss occurring. It also refers to action taken to lessen the severity of a loss if one occurs.

Answer 40

This is the act of analyzing the loss exposure presented by a risk and determining that the potential loss is acceptable. Often associated with self-insurance.

Answer 41

This is not a risk management technique that's used by consumers. This describes the insurance company's process for determining whether to cover a new loss exposure.

Answer 42

This is the risk management technique that manages an individual's risk by sharing the possibility of loss with others and spreading the cost over a large number of individuals.

Answer 43

This is the act of exchanging the responsibility for a significant potential loss (risk) to another party in exchange for a smaller, preset cost or premium.

Answer 44

This is a risk retention process. Maintains monetary reserves to cover potential costs in the event of financial loss occurring.

Answer 45

This is a type of risk that involves the change of both loss and gain. It is not insurable.

Answer 46

Transference

Basic Principles of Life and Health Insurance Flashcards

(72 cards)