Chapter 1: Insurance Basics Flashcards
(29 cards)
What is Insurance?
Transfer of risk of loss
What are the 4 components of an I
Insurance transaction?
1.) Solicitation ( to sell)
2.) Negotiation
3.) Sale
4.) Advising coverage and claims
Define Insurable interest
Risk of loss
When does insurable interest need to exist?
During time of application
What are 3 examples of insurable interest?
1.) Policy owners own life
2.) Close blood relative
3.) Life of business owner, key enployee etc…
What are the 4 characteristics of an insurance contract?
Conditional: certain CONDITIONS must be met
Aleatory: unequal amounts/values are exchanged
Adhesion: take it or leave it ( no negation)
Unilateral: Only 1 parry is obligated to do something
What is the difference between warranty and representation?
Warranty: absolutely true statement
Representation: believed to be true best of knowledge
What is the difference between buyers guide and policy summary?
1.) Buyers guide is generic info about choosing the right plan
2.) Policy summary is specific information about the features and elements of a policy
When does the buyers guide need to be given?
Prior to accepting the initial premium, or with the policy as long as its given a free look period
When does the buyers guide need to be given?
Prior to accepting the initial premium, or with the policy as long as its given a free look period
What is underwriting?
Risk selection and classification process
What is underwriting?
Risk selection and classification process
What is the starting point of underwriting?
The application
What is the starting point of underwriting?
The application
What are the two parts of an application?
1.) General info (name, age, etc…)
2.) Medical info ( background, present health etc…)
When is it necessary for a medical exam to be done by a professional?
If amount of insurance is large
What is an agent’s report?
An agent’s personal observation of proposed insured
Who will see the agent’s report?
1.) The agent
2.) The underwriter
When requiring signatures, who DOES NOT need to sign?
A minor
What Is a premium receipt?
A receipt that is given once premium is collected
With a conditional receipt, when will coverage start?
1.) On date of application OR
2.) date of medical exam (whichever occurs last)
What is the purpose of the Medical Info Bureu (MIB) ?
To help insurers know what areas of impairment need to be explored
What is the purpose of the Fair Credit Reporting Act?
To protect consumers against the spread of immaculate, Absolete, personal, or financial info
What is the difference between consumer and an investigative report?
1.) Consumer is WRITTEN/ORAL info about credit, character, reputation, or habits
2.) Investigative involve interviews from associates, family, friends, and neighbors, for information
