Gen Ins

Question 1

The chance of loss with NO possibility of gain

Answer 1

Pure risk

Question 2

(gambling) a risk situation that offers the opportunity for gain

Answer 2

Speculative risk

Question 3

a cause of loss

Answer 3

Peril

Question 4

Something that increases the risk

Answer 4

Hazard

Question 5

the attitudes and habits of an individual (character and reputation)

Answer 5

Moral Hazards

Question 6

individual’s indifference (apathy) toward loss. A careless person

Answer 6

Morale hazard

Question 7

The larger the number of separate risks of a like nature combined into one group, the more predictable the number of future losses of that group within a given time period

Answer 7

Law of large numbers

Question 8

condition that could result in a loss

Answer 8

A loss exposure

Question 9

Provides general information about the applicant

Answer 9

The application

Question 10

reveals hazards related to the health of the applicant or the use

Answer 10

Physical Examination

Question 11

include information about the applicant’s finances, background, habits, and reputation

Answer 11

Consumer credit reports

Question 12

risks are not considered insurable unless the insurance company has a large enough number of similar risks and knows enough about its previous loss experience to be able to predict the future reliably

Answer 12

Large number of homogenous units

Question 13

The insurer must be able to place a monetary value on the loss

Answer 13

loss must be ascertainable

Question 14

being unable to predict what is going to happen to the individual exposure unit

Answer 14

Loss must be uncertain

Question 15

The nature of the loss must be such that an economic hardship must occur should that loss occur

Answer 15

Economic hardship

Question 16

catastrophic perils include wars, nuclear risks, and floods. They are excluded from coverage

Answer 16

Exclusion of catastrophic perils

Question 17

a person has an insurable interest in another if they would benefit if that other person continues to live

Answer 17

Insurable interest

Question 18

restores the insured person, in whole or in part, to the condition they enjoyed prior to the loss

Answer 18

principle of Indemnity

Question 19

The process of examining, accepting, or rejecting insurance risks

Answer 19

Underwriting

Question 20

agents are “frontline” or “field” underwriters

Answer 20

Agent as underwrite

Question 21

evaluates and rate the risk based on the information provided in the application as well as Medical Information Bureau (MIB) reports, med exams, physician statements, special questionnaires, inspection reports and credit reports

Answer 21

Home office underwriters

Question 22

when clients, due to a particularly company’s underwriter standards, take advantage of a situation that ends up costing the insurance company money in excess claims.

Answer 22

Adverse Selection

Question 23

employee joins company to take advantage of health benefits because he would not qualify for his own policy otherwise

Answer 23

Example

Question 24

employee pays part of the premium

Answer 24

Contributory group

Question 25

the risk is transferred from an individual to a group

Answer 25

Profitable distribution of exposures

Question 26

the company has a legally enforceable obligation to make all benefits payable for which premiums have been paid

Answer 26

Contract law

Question 27

Civil injury. Most common is neglect: the failure to act as a reasonable person would in the same set of circumstances

Answer 27

Tort law

Question 28

The possibility (uncertainty) that a loss might occur

Answer 28

Risk

Question 29

any ambiguity will be construed in favor of the insured

Answer 29

Doctrine of Adhesion

Question 30

conditions that apply to both parties to the contract

Answer 30

Conditional contract

Question 31

the outcome depends upon chance

Answer 31

Aleatory

Question 32

only one party to the contract, the insurer, makes an enforceable promise to pay a covered claim if the premium has been paid

Answer 32

Unilateral

Question 33

concern an individual insured, not the insured's property

Answer 33

Personal

Question 34

truth to the best of the client's knowledge, it is assumed that insurance contracts are entered into in good faith

Answer 34

utmost good faith

Question 35

restores the insured person, in whole or in part, to the condition they enjoyed prior to the loss

Answer 35

Indemnity

Question 36

the written instrument in which a contract of insurance is set forth

Answer 36

policy

Question 37

an intentional and fraudulent omission

Answer 37

fraud

Question 38

neglect to communicate that which a party knows, and ought to communicate

Answer 38

concealment

Question 39

the probable and reasonable influence of the facts upon the party to whom the communication is due

Answer 39

materiality

Question 40

- written or oral - may be made at the time of, or before, issuance of the policy - altered or withdrawn before the insurance is affected, but not afterwards

Answer 40

representation

Question 41

shall not cause or permit to be issued, circulated or used, any statement that is known, or should have been known. - terms of policy issued by insurer - benefits or privileges promised - future dividends payable - penalties ~ fine not exceeding $25,000 ~ suspended the license of such person for not exceeding three years ~ suspended the insurer's certificate of authority to do the class of insurance in respect to which the violation occured

Answer 41

Misrepresentation

Question 42

Six required specifications for all insurance policies

Answer 42

1. parties between whom the contract is made 2. the property of life insured 3. the interest of the insured in property insured, if he or she is not the absolute owner thereof 4. the risks insured against 5. the period during which the insured is to continue 6. either: * a statement of the premium * if the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined and paid.

Question 43

to cancel or void a contract and the return of the parties to the position they would have occupied if the contract had not been made.

Answer 43

recission

Question 44

A form on which the prospective insured states facts requested by the insurer

Answer 44

Application

Question 45

the agreement between the insurer and the insured

Answer 45

Policy

Question 46

a form attached to a policy that modifies the conditions of the policy

Answer 46

Rider

Question 47

termination of a contract of insurance mid-term

Answer 47

cancellation

Question 48

termination of a policy because of failure to pay the premium

Answer 48

lapse

Question 49

the automatic continuation of an insurance policy for another policy period

Answer 49

renewal

Question 50

the discontinuation of an insurance policy at its normal expiration date

Answer 50

Non-renewal

Question 51

a period of time after premium date during which a policy remains in force without penalty

Answer 51

grace period

Question 52

the cost per unit charged by an insurer for insurance coverage

Answer 52

rate/premium

Question 53

that portion of the premium paid that the insurer is entitled to for providing insurance coverage

Answer 53

earned premium

Question 54

that portion of the premium paid that the insurer is not entitled to.

Answer 54

unearned premium

Question 55

a lower expectation of incurring a loss than a standard risk (ex: applicant who doesn't smoke can expect reduced premium)

Answer 55

preferred risk

Question 56

regarded as average and insurable as standard rates.

Answer 56

Standard risk

Question 57

regarded as below average (even though they have dangerous occupatiion, may be insured as substandard risk at higher premium)

Answer 57

substandard risk

Question 58

requires pre-notification of any possible investigation and post-notification if any adverse underwriting action is taken by the company

Answer 58

the fair credit reporting act

Question 59

nonprofit association that maintains medical data on applicants for life or health insurance

Answer 59

The Medical Information Bureau (MIB)

Question 60

person is authorized to represent and act for another person corporation

Answer 60

agency

Question 61

enters into an agency agreement with one or more insurers

Answer 61

an independent produce

Question 62

producers represent single insurer and are obligated to submit business only to that company

Answer 62

Exclusive

Question 63

sell insurance directly to insure through their own employees, through the mail or via the internet

Answer 63

Direct response

Question 64

agents sell industrial life insurance on which premium is usually collected on weekly basis at the home of the policy holder

Answer 64

Home Service

Question 65

a person who is in a position of holding in trust and confidence that affairs of another, especially as it pertains to financial matters

Answer 65

fiduciary

Question 66

Explicit, definite agreement

Answer 66

express authority

Question 67

is not expressly granted under an agency contract, but it is actual authority the producer has.. by accepting the premiums from the producer, the company has implied that the producer has the authority to conduct this practice

Answer 67

Implied Authority

Question 68

the authority a producer seems to have

Answer 68

Apparent authority

Question 69

As front line, producers initiate the underwriting process by completing the application, gathering necessary additional information and required signatures, collecting the initial premium, and issuing the conditional receipt. it's the producer's responsibility to seek out those applicants that would present the lowest risk to the insurer

Answer 69

Producer's responsibilities

Question 70

pre-select good risks before being evaluated by home office underwriter

Answer 70

Pre-selection

Question 71

process where underwriter evaluates and rates a risk based on information in the application as well as other sources

Answer 71

Post selection

Question 72

authorized to transact life insurance, accident and health insurance, and life and accident and health insurance

Answer 72

life agent only

Question 73

transact insurance coverage for sickness, bodily injury, or accidental death and may include benefits for disability income and 24 hr. care.

Answer 73

accident and health agent

Question 74

advises or offers to advise any person insured under, named as beneficiary of, or having any interest in, a life or disability insurance contract

Answer 74

Life and disability insurance analyst

Question 75

person authorized to act as a life agent on behalf of a life or disability insurer

Answer 75

life licensee

Question 76

entitle the licensee to transact insurance coverage on human lives, including benefits of endowment and annuities and may include benefits in the event of death or dismemberment by accident and benefits for disability income

Answer 76

life only

Question 77

entitle the licensee to contract insurance coverage for sickness, bodily injury, or accidental death and may include benefits for disability income

Answer 77

accident and health

Question 78

commissioner may decline to issue a license to an applicant if:

Answer 78

~ has been refused a license or had a license revoked by any public authority ~ has been convicted of a misdemeanor or felony which involved the misappropriation of money or property.

Question 79

to transact insurance, include any of the following:

Answer 79

1. solicitaition 2. Negotiation preliminary to execution 3. execution of contract insurance 4. Transaction of matters subsequent to execution of the contract and arising our of it

Question 80

person authorized by and on behalf of an insurer, to transact all classes of insurance other than life, disability or health insurance

Answer 80

Insurance agent

Question 81

a person authorized to act on behalf of a life insurer or a disability insurer to transact life insurance, accident and health insurance, and life, accident & health insurance

Answer 81

a life licensee

Question 82

person who, for compensation and on behalf of another person, transacts insurance other than life, disability or health insurance with, but not on behalf of an admitted insurer

Answer 82

insurance broker

Question 83

a natural person employed to aid an insurance agent or insurance broker transaction insurance other than life disability or health insurance

Answer 83

Insurance solicitor

Question 84

Any person who transacts insurance w/o a valid license so to act is guilty of misdemeanor punishable by fine not exceeding $_______ or by imprisonment in county jail for period not exceeding _________

Answer 84

$50,000, one year

Question 85

insurers are responsible for the acts of their agents

Answer 85

Doctrine of agency

Question 86

natural person employed to aid an insurance agent or broker who appointed them.

Answer 86

Insurance solicitor

Question 87

type of professional liability that is desired to protect the insured against legal liability resulting from negligence

Answer 87

Error and omissions

Question 88

protect producers from financial losses they might incur for giving incorrect advice (or error) or for not providing a client with information regarding an important issue (or omission)

Answer 88

Errors and omissions policies