Life - Limited to Funeral and Burial Insurance

How long must an agent keep client records?

18 months

How often must an agent/broker renew their license?

2 years

How long must a life insurance agent keep detailed records?

5 years

What is the grace period for renewing an insurance license?

60 days

Who pays the premium for group insurance?

A business, organization or civic group.

What is tort law?

A civil wrong intentional done.

Who does a broker represent?

A client to companies.

What is the California Insurance Code?

A collection of laws established by state legislature that regulate transacting laws.

Who does an agent represent?

A company to a client.

What is a level term policy?

A policy that charges a higher premium than is required to cover risk of death in earlier years and set portion aside for later years.

What is errors and omissions insurance?

A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions

What is an underwriter?

A trained tecnician who evaluates risks to determine rates.

What is an insurable interest?

Acquired right one has to be indemnified in the event of a loss to an event, a person or property.

What are the four elements of a contract?

Agreement, consideration, competent parties and valid legal purpose.

What is a buy/sell agreement?

Agreements that helps establish what happens to a company if one owner dies.

What is utmost good faith?

Al parties are relied upon to be honest to each other.

What are convertible policies?

Allow the owner to convert a term to a cash value before end of the policy.

What is a rider?

An attachment to the life insurance policy that changes its conditions by increasing or decreasing benefits.

What is an alien insurance company?

An insurance company with their home office in another country.

What is a domestic carrier?

An insurance company with their home office in the state of California.

Wht is a foreign carrier?

An insurance compay with their home office in another state.

What is an annuity?

An investment product that is fixed or variable (not insurance)

What is misrepresenation?

An untrue representation.

What is life insurance?

Any type of insurance that guarantees a person a sum of money upon their death.

What is a producer?

Anyone who transacts insurance

What is apparant authority?

Appears to exist and the company doesn't tell the agent they can't do it

What is industrial insurance usd for?

Blue collar workers to give minimum coverage.

What is mortality cost?

Chance of death increases as insured ages.

What is splt dollar life insurance?

Costs of insurance are shared between the employee and employer.

What is facility of payment clause?

Death benefit may be paid to someone other than beneficiary providing money is used to pay expenses, etc.

What benefits does Cash Value (Permanent) insurance give you?

Death benefits and living benefits

What benefits does Term insurance give you?

Death benefits only

What is a cross purchase plan?

Each stockholder buys a life insurance policy on the life of every other stockholder.

What does the commissioner do?

Enforces rules and regulations to California Code of Regulations.

What does the Department of Insurance enforce?

Enforces the California Insurance Code.

Who can hold an insurable interest?

Financial interest or strong love generated by blood or marriage.

What is punishment for transacting without a license?

Fined up to $50,000 or 1 year jail

What is the punishment for fraud?

Fined upto $150,000 and/or jail beteen 2-5 years

How many different people can be part of an insurance application?

Four different people. Insured, owner, premium payor and beneficiary.

What are the three parts to an application?

General Information, non-medical information, and agent statement

What is a renewable term insurance?

Gives the policy holder the right to renew the policy without providing proof of insurability.

What is illegal inducement?

Giving a gift of more than $25 to induce prospect to buy a policy

What is a reciprical company?

Group members called subscribers who share the risk for each other. Makes them both insureds and insurers.

What is material information?

Information that would influence a party's decision about a contract.

What are admitted insurers?

Insurers who are approved to transact insurance in California.

What is credit life insurance used for?

Insures the lives of debtors. Installment payments attached to loans.

What are the three term policy structures?

Level term, decreasing term, increasing term.

What is Key Person Insurance?

Life insurance policy that a company purchases on a key executives life.

What are the two types of whole life policies?

Limited payment whole life and single premium whole life.

What is the principle of indemnification?

Making a policy holder "whole" again - not to create profit.

What is twisting?

Making misleading statements or comparisons to induce someone to take out an insuance policy or lapse,surrender or forfeit.

What is a fraternal benefit society?

Members usually non-profit that all share risk upto a retention limit (maximum amt).

What is the Human Value Approach?

Method of evaluating life insurance needs based on present salary, present earnings, annual salary, etc

What is the punishment for twisting?

Misdemeanor 1 year jail and/or $25,000 fine. Commissioner can suspend license for 3 years.

If changes are made on application what must you do?

Must be crossed out with single line, edited and initialed by insurer and agent.

What two approaches are used to evalute insurance needs?

Needs approach and Human Value Appoach.

What is concealment?

Neglecting to communicate or failure to disclose facts that are known.

What is unilateral?

No equal value exchanged.

What is implied authority?

Not specifically stated but included based o other statements or authorit.

On a term insurance policy when is protection provided?

Only during the term of the policy.

What risk is insurable

Only pure risk.

What are representations?

Oral or written statements made to the best of one's knowledge and belief.

What three types of life insurance?

Ordinary (individua), group and industrial.

Most types of policies written are what type of life insurance?

Ordinary.

What is single premium whole life?

Paid for with one premium at the beginning of the contract.

What is an insured?

Person who is covered by a policy.

What is a policy owner?

Person, organization or entity that owns the policy and controls its rights, options and benefits.

What is the second party to an insurance contract called?

Policy holder

What is unearned premium?

Portion of an advance premium that expires with the passage of time.

What is a mortality table?

Predicts how many persons per 1,000 in a given age group will die in a given period of time.

What is increasing term?

Premium remains the same for the whole policy but the face amount increases over time.

What is decreasing term?

Premium remains the same for whole policy but the face amount decreases to zero.

What is limited pay whole life?

Premiums paid for limited period with higher premium to build cash value sooner.

What is estate planning?

Process of planning before someone dies how his/her estate will be preserved.

What is health/disability insurance?

Protection against financial loss of medical expenses caued by illness or injury.

What is property insurance?

Protection from losses when property is stolen, damaged or destroyed.

What is casualty insurance?

Protection from negligent acts or omissions that cause bodily harm or property damage to a third person.

What is a return of premium rider?

Provides amount of money equal to the premium paid for policy if insured dies during term.

What is whole life insurance?

Provides permanent protection for one's entire span of life. Same premium at fixed rate. Pays entire face amount within policy.

What is a conditional binding receipt?

Receipt showing premium has been paid

What is rebating?

Returning a portion of agent commission to induce prosect to buy polic.

What is defamation?

Slandering competition.

What is express authority?

Specific details of what a person can do.

What is mortality rate?

Statistics collected over time to help predict future deaths.

What is a binder?

Temporary coverage given for insurance except for LIFE insurance.

What is adverse selection?

Tendency of those wo re in need of insurance to apply.

What is speculative risk?

The chance of loss and a chance of gain.

What is pure risk?

The chance of loss only with no chance of gain or profit.

Who chooses the commissioner of insurance?

The citizens of California.

Who heads the Department of Insurance?

The commissioner.

What is a retention limit?

The maximum amount of risk an insurance company will accept.

What is aleatory?

The performance of a contrat depends on uncertain events.

What is premium payor?

The person responsible for paying the premium.

What is spread of risk?

The pooling of risk with other sources.

What is loss exposure?

The potential for incurring a loss.

What is risk?

The uncertainty of lose and is present whenever there is choice.

What is fraud?

To deceive or act in dishonest way.

What is group insurance used for?

To provide coverage to individuals who could not otherwise afford it.

What is a hold harmless agreement?

Transfers the risk from one person to someone else.

What are the three types of ordinary life insurance contracts?

Whole Life, Term life and Endowments.