General Insuance Concepts

Question 1

An insurance producer not appointed by an insurer and is deemed to represent the client

Answer 1

Broker

Question 2

A transfer of risk of loss

Answer 2

Insurance

Question 3

The cost of an insureds loss is transferred over to the ______ and spread among other ________.

Answer 3

Insurer / insureds

Question 4

The uncertainty of chance of a loss occurring.

Answer 4

Risk

Question 5

____ risk is the uncertainty or chance of loss occurring.

Answer 5

Pure

Question 6

______ risk involved the opportunity for either loss or gain. And is not ________.

Answer 6

Speculative / insurable

Question 7

Conditions or situations that increase the probability of an insured loss occurring.

Answer 7

Hazards.

Question 8

Individual characteristics such as a pst medical history or birth condition like blindness that increase the chance of loss.

Answer 8

Physical hazards

Question 9

Tendencies towards increased risk. Ie someone who lies on an app.

Answer 9

Moral hazard

Question 10

Increased risk due to a state of mind that causes indifference to loss, such as carelessness.

Answer 10

Morale hazards

Question 11

Causes of loss insured against in an insurance policy.

Answer 11

Perils

Question 12

Insures against the loss and/or damage of property and resulting liabilities.

Answer 12

Casualty insurance

Question 13

A chance that loss will occur.

Answer 13

Risk

Question 14

Increases the probability of loss.

Answer 14

Hazard

Question 15

The cause of loss

Answer 15

Peril

Question 16

A reciprocal insurance exchange is a formal ________ _________ arrangement.

Answer 16

Risk sharing

Question 17

The most effective way to handle risk is to _______ it so that the loss is borne by another party.

Answer 17

Transfer

Question 18

Insurance is the most common method of ________ risk from and individual group to an insurance company.

Answer 18

Transferring

Question 19

Eliminating exposure to loss.

Answer 19

Avoidance

Question 20

Planned assumption of risk through use of deductibles, copays, or self insurance.

Answer 20

Retention

Question 21

When an insured accepts the responsibility for the loss before the insurance co. Pays.

Answer 21

Self-insurance

Question 22

1 reduces expenses and improves cash flow
2. Increases control if claim reserving and settlements
3. Funds losses that cannot be insured

Answer 22

Retention

Question 23

Actions such as installing smoke detectors, annual physicals, or lifestyle changes would be examples of _________.

Answer 23

Reduction

Question 24

1. Due to chance
2. Definite and measurable
3. Statistically predictable
4. Not catastrophic
5. Randomly selected and large loss exposure

All elements of _________ ________

Answer 24

Insurable risk

Question 25

Government insurance is funded by _______ and private insurance is funded by __________.

Answer 25

Taxes / premiums

Question 26

Insurance incorporated in this state

Answer 26

Domestic

Question 27

Insurance incorporated in another state

Answer 27

Foreign

Question 28

Insurance incorporated in another country

Answer 28

Alien

Question 29

The acts of the agent/producer within the scope of authority are deemed to be the acts of the insurer is representative of what.

Answer 29

Law of agency

Question 30

Insurance agents represent the ___________.

Answer 30

Insurer (principal)

Question 31

The authority a principal intends to grant to an agent by means of the agents contract. It is written in the contract.

Answer 31

Express

Question 32

Authority thay is not expressed or written in the contract but which is assumed in order to transact business. (Since not every single detail of an agents authority can be written in/spelled out in the written contract.

Answer 32

Implied

Question 33

An agent collecting premiums and remitting them to an insurer even though it is not spelled out in the written contract is an example of _______ authority.

Answer 33

Implied

Question 34

The assumption of authority based on actions, words, or deeds of the principal. Ie an agent uses insurers stationary.

Answer 34

Apparent

Question 35

I’m order for contracts to be legally binding they must have what 4 essential elements. (ACCL)

Answer 35

1. Agreement (offer and acceptance) 2. Consideration 3. Competent parties 4. Legal purpose

Question 36

The applicant usually makes the offer when __________.

Answer 36

Submitting the application

Question 37

The binding force in any contract. Something of value that each party gives the other. Ie premium payment and promise to pay in event of loss.

Answer 37

Consideration

Question 38

To ensure legal purpose of a life insurance policy it must have _________ and ________

Answer 38

Insurable interest / consent

Question 39

To restore but not allow an insured to profit from a loss

Answer 39

Indemnity

Question 40

Principle that implies there will be no fraud, misrepresentation, or concealment between the parties.

Answer 40

Utmost good faith.

Question 41

Statements that are believed to be true to the best of one’s knowledge but not guaranteed to be true. Ie the answers on Application.

Answer 41

Representations

Question 42

Untrue statements on an application that could void the contract.

Answer 42

Misrepresentations

Question 43

A statement that if discovered would alter the underwriting decision of the insurance company. If intentional are considered fraud.

Answer 43

Misrepresentations

Question 44

An absolutely true statement upon which the validity of the insurance policy depends.

Answer 44

Warranty

Question 45

Statements made by applicants are usually not considered _________ except in cases of fraud.

Answer 45

Warranties

Question 46

Intentional withholding of information of a material fact that will result in an imprecise underwriting decision and may void the policy.

Answer 46

Concealment

Question 47

Intentional misrepresentation or intentional concealment if a material fact used to induce another party to make or refrain from making a contract or to deceive or cheat a party. Is grounds for voiding the insurance contract.

Answer 47

Fraud

Question 48

Insurance owned by stockholder; non-par

Answer 48

Stock

Question 49

Insurance owned by policyholders; participating and pays dividends to policy holders

Answer 49

Mutual

Question 50

Not for profit organization that is NOT an insurer and is formed to provide insurance benefits for members of and affiliated lodge, religious organization or fraternal org.

Answer 50

Fraternal benefit society

Question 51

Powers specifically stated in the contract

Answer 51

Express

Question 52

Powers not specifically stated in the contract; but assumed becesssary to conduct insurance business

Answer 52

Implied

Question 53

The appearance of a relationship between the Shen and principal based on words or actions

Answer 53

Apparent

Question 54

Approved by dept of insurance and has certificate of authority.

Answer 54

Authorized / admitted

Question 55

No certificate of authority and cannot transact business in the state

Answer 55

Unauthorized / non admitted

Question 56

Contact characteristics (AACPU)

Answer 56

Adhesion Aleatory Conditional Personal Unilateral

Question 57

One party prepares the contract; the other lady must accept it as is

Answer 57

Adhesion

Question 58

Exchange of unequal amounts

Answer 58

Aleatory

Question 59

Certain conditions must be met

Answer 59

Conditional

Question 60

Between the policy owner and the insurance company

Answer 60

Personal

Question 61

Only one party to the contract is legally bound to so anything.

Answer 61

Unilateral

Question 62

Ambiguities if the contract are always resolved in favor of the _______.

Answer 62

Insures

Question 63

Parties rely on each other for information

Answer 63

Utmost good faith

Question 64

Material misrepresentations (if intentional), breach of warranties, concealment, fraud all can do what.

Answer 64

Void the contract

Question 65

Voluntary act of relinquishing a legal right

Answer 65

Waiver

Question 66

Consequence of a waiver

Answer 66

Estoppel

Question 67

Consideration

Answer 67

When an insured makes truthful statements on the application and pays the required premium.

Question 68

Granting insurance must not be _______

Answer 68

Mandatory