Basics of Life and Health

Question 1

What is Actuarial Department:

Answer 1

This is the department that calculates policy rates, reserves, and dividends.

Question 2

What is an Adjuster

Answer 2

This is the person who investigates claims and arranges for them to be settled or denied.

Question 3

What is an Alien Insurer

Answer 3

In the United States, this is an insurer whose principal office and domicile location is outside this country.

Question 4

What is an Admitted Insurer

Answer 4

This is an insurer who has received a certificate of authority from a state’s department of insurance which authorizes them to conduct insurance business in that state.

Question 5

What is an Agent

Answer 5

This is an individual or organization that’s authorized to solicit, sell, and transact (bind) coverage for specific insurance providers under the terms of one or more agent contracts.

Question 6

What is an Authorized Insurer

Answer 6

This is an admitted insurer.

Question 7

What is a Broker

Answer 7

This is a person who represents himself and the insured (i.e., the client or customer). A broker cannot bind coverage on behalf of an insurance carrier because a broker is not appointed as an agent.

Question 8

What is a Captive Insurer

Answer 8

This is an insurer that’s established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.

Question 9

What is a Certificate of Authority

Answer 9

This is a license that’s issued to an insurer by an insurance department (or equivalent state agency) that authorizes that company to conduct insurance business in that particular state.

Question 10

What is a Claims Department

Answer 10

This is the department that’s responsible for processing, investigating, and paying claims.

Question 11

What is Divisible Surplus

Answer 11

This is the amount of earnings that are paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.

Question 12

What is a Domestic Insurer

Answer 12

This is an insurer with its principal or home office in the state in which it’s authorized.

Question 13

What is a Foreign Insurer

Answer 13

This is an insurer whose principal office or domicile location is in a state that’s different from the state in which it’s transacting insurance business.

Question 14

What is a Fraternal Benefit Society

Answer 14

This is a non-profit benevolent organization that provides insurance to its members.

Question 15

What is an Independent Insurance Agency

Answer 15

This is an agency that can represent any number of insurance companies through contractual agreements. Unlike a captive agency, they are not limited to one insurance company.

Question 16

What is Insurance

Answer 16

This is the transfer of risk through the pooling or accumulation of funds.

Question 17

What is Insured

Answer 17

This is the customer who receives insurance protection under an insurance policy.

Question 18

What is an Insurer

Answer 18

This is the customer who receives insurance protection under an insurance policy.

Question 19

What is Lloyds of London

Answer 19

This is NOT an insurer but a group of individuals and companies that underwrite unusual insurance policies.

Question 20

What is a Marketing Division

Answer 20

This is the division that’s responsible for acquiring prospective applicants through various advertising media.

Question 21

What is a Monoline Insurer

Answer 21

This is an insurance carrier that only sells one line of insurance.

Question 22

What is a Multi-Line Insurer

Answer 22

This is an insurance company or independent agent that provides a “one-stop-shop” for businesses or individuals who are seeking coverage for all of their insurance needs. For example, many large insurers offer individual policies for automobile, homeowner, long-term care, life, and health insurance needs.

Question 23

What is a Mutual Insurance Company

Answer 23

This is an insurance company that’s characterized by having no capital stock, being owned by their policy owners, and typically issuing participating insurance.

Question 24

What is a Non-Admitted (Unauthorized) Insurer

Answer 24

This is an insurer that has not received a certificate of authority from a state’s department of insurance which authorizes it to conduct insurance business in that state.

Question 25

What is a Nonparticipating Policy

Answer 25

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 the board of directors.

Question 26

What is a Participating Policy

Answer 26

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.

Question 27

What is a Personal Producing General Agency (PPGA)

Answer 27

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.

Question 28

What is a Policy owner

Answer 28

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.

Question 29

What is a Private (Commercial) Insurer

Answer 29

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.

Question 30

What is a Producer

Answer 30

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

Question 31

What does Proposed Insured mean

Answer 31

This is the person whose life will be covered by an insurance policy. (See also: Insured)

Question 32

What is a Public Adjuster

Answer 32

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

Question 33

What is a Reciprocal Insurer

Answer 33

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

Question 34

What is Reinsurance

Answer 34

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.

Question 35

What is a Reinsurer

Answer 35

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 than they would otherwise be able to obtain.

Question 36

What is a Risk Retention Group

Answer 36

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

Question 37

What is a Sales Department

Answer 37

This department acquires clients through one-on-one meetings in which consumers complete applications.

Question 38

What is a Self-Insurer

Answer 38

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

Question 39

What are Service Representatives

Answer 39

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

Question 40

What are Solicitors

Answer 40

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

Question 41

What is a Stock Insurance Company

Answer 41

This is an insurance company that’s owned and controlled by a group of stockholders (or shareholders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies

Question 42

What is Surplus Lines Insurance

Answer 42

This is non-traditional insurance that’s only available from a surplus lines insurer. This type of insurance provides coverage for substandard or unusual risks and is not available through private or commercial carriers.

Question 43

What is an Unauthorized Insurer

Answer 43

This is a non-admitted insurer.

Question 44

What is an Underwriting Department

Answer 44

This is the department within an insurance company that’s responsible for reviewing applications, approving or declining applications, and assigning risk classifications.