Life-Limited to the Payment of Funeral and Burial Expense

Implied Authority

Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.

Code Requirements for use of a name

Every individual and organization licensee and every applicant for such a license shall file with the commissioner in writing the true name of the individual or organization and also all fictitious names under which he conducts or intends to conduct his business and after licensing shall file with the commissioner any change in or discontinuance of such names

Apparent Authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

indemnity

a payment for damage or loss

Beneficiary

one who receives benefits upon insured's death

Policyowner

pays premium to insurance company

Warranty

*A warranty can be either express or implied. know that a representation in an insurance contract qualifies as an implied warranty.

Policy Riders

Added to a policy to modify provisions that already exist

Any person who knowingly or willfully obtains information about an individual from an insurance company under false pretenses shall be fined

Not more than $10,000, imprisonment not to exceed one year, or both

Express Authority

The authority granted to an agent by means of the agent's written contract.

perils

causes of loss insured against in an insurance policy

Immediate annuity (single premium immediate annuity)

payments begin within one year, purchased with a single lump sum and payment typically start within the 30 days of the purchase.

Recission

revocation of a contract

Life limited to funeral and burial licensee

transact only specific life insurance policies or annuities having an initial face amount of twenty thousand dollars ($20,000) or less that are designated by the purchaser for the payment of funeral and burial expenses, shall not be required to take the full life agent examination to obtain a license. The applicant shall be required to take an examination developed to test their knowledge of topics relevant to the type of policies that they are restricted to sell.

Code Requirements for agency name

"Representing ____;" "A stockholder of ____;" "Placing business through ____;" "Using services of ____." The use of the corporation or association name in the manner provided in this section shall not constitute such use as would mislead the public within the meaning

Misrepresentation of Policies

(a) A person shall not make any statement that is known, or should have been known, to be a misrepresentation (1) to any other person for the purpose of inducing, or tending to induce, such other person either to take out a policy of insurance, or to refuse to accept a policy issued upon an application therefor and instead take out any policy in another insurer, or (2) to a policyholder in any insurer for the purpose of inducing or tending to induce him or her to lapse, forfeit or surrender his or her insurance therein.

An insurance policy MUST SPECIFY (6 components)

(a) The parties between whom the contract is made. (b) The property or life insured. (c) The interest of the insured in property insured, if he is not the absolute owner thereof. (d) The risks insured against. (e) The period during which the insurance is to continue. (f) Either: (1) A statement of the premium, or (2) 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.

Things you do not need to disclose in a contract

1. Those which the other knows. 2. Those which, in the exercise of ordinary care, the other ought to know, and of which the party has no reason to suppose him ignorant. 3. Those of which the other waives communication. 4. Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material. 5. Those which relate to a risk excepted from insurance, and which are not otherwise material.

six elements required for insurance

1.the parties to a contract 2.the persons or property being insured 3.a statement of the insurable interest 4.the risks insured against 5.the time period during which the policy will be in force or continue 6.stated annual, semi-annual, or quartly premium.

Funeral Insurance Contract

A "funeral insurance contract" is a life policy embodying an agreement, for a valuable consideration, to embalm or dispose of, or expressly to procure or pay or to provide funds for, in whole or in part, the embalming or disposal of the remains of any person living at the time of the issuance of such policy.

annuity (this is not life insurance)

A contract that provides income for a specified period of years, or for life.Helps someone from outliving their money, assists in liquidation of their estate (annuity pays annuitant)

Filing license renewal application

A licensee who has applied to renew a license under this chapter shall be entitled to continue operating under the existing license for 60 days after its specified expiration date, or until notified by the department that the renewal application is deficient, whichever comes first, if the applicant has satisfied all license renewal requirements, including, but not limited to, the following: (1) The submission of the applicable renewal application and fee on or before the expiration date of the license. (2) The satisfaction of all required continuing education or training requirements. (b) This section shall not apply to any license that is suspended or revoked.

Accidental Death Benefits

A policy rider that states that the cause of death will be analyzed to determine if it complies with the policy description of accidental death.

Incontestability

A provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue or from the date of any reinstatement thereof except for suicide, nonpayment of premiums or the violation of the conditions of the policy relating to military or naval service in time of war.

Premium

A specific sum of money paid by the insured to the insurance company in exchange for financial protection against loss.

According to the law of agency the principle is represented by

An agent

Be able to identify a definition of Life - Limited to the Payment of Funeral and Burial Expenses licensee

An applicant for a life-only license pursuant to Section 1626 or a life-only license limited to the payment of funeral and burial expenses who is limited by the terms of a written agreement with an insurer that has filed on that life-only agent's behalf a notice of appointment with the commissioner to transact only specific life insurance policies or annuities having an initial face amount of twenty thousand dollars ($20,000) or less that are designated by the purchaser for the payment of funeral and burial expenses, shall not be required to take the full life agent examination to obtain a license. The applicant shall be required to take an examination developed to test their knowledge of topics relevant to the type of policies that they are restricted to sell.

Agent

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.

Definition of transact and why its important

An insurance agent is a person who transacts insurance, other than life, disability, or health insurance, on behalf of an admitted insurance company. The term "insurance agent" as used in this chapter does not include a life agent as defined in this article.

Accidental Death Insurance

An insurance policy that provides payment if the insured's death is the result of an accident.

Concealment

An intentional and fraudulent omission, on the part of one insured, to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind.

Punishment for transacting insurance without a license

Any person who transacts insurance without a valid license so to act is guilty of a misdemeanor punishable by a fine not exceeding fifty thousand dollars ($50,000) or by imprisonment in a county jail for a period not exceeding one year, or by both that fine and imprisonment.

Punishment for Misrepresentation of Policies

Any person who violates the provisions of Section 780 or 781 is punishable by a fine not exceeding twenty-five thousand dollars ($25,000), or in a case in which the loss of the victim exceeds ten thousand dollars ($10,000), by a fine not exceeding three times the amount of the loss suffered by the victim, by imprisonment in a county jail for a period not to exceed one year, or by both a fine and imprisonment. Restitution to the victim ordered pursuant to Section 1202.4 of the Penal Code shall be satisfied before any fine imposed by this section is collected.

When can a representation be altered or withdrawn?

Before the insurance is effected, but not afterwards

Change of Address

Every licensee and every applicant for a license shall immediately notify the commissioner using an electronic service approved by the commissioner of any change in his or her e-mail, residence, principal business, or mailing address as given to the commissioner pursuant to Sections 1658 and 1728.

GLBA (Gramm-Leach-Bliley Act)

Federal law enacted in 1999 to control the ways that financial institutions deal with the private information of individuals

Unilateral Contract

If only one party has made a legally enforceable promise

Materiality

Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.

Representation

May be oral or written, may be made at the time of or issuance of policy. A representation as to the future is a promise unless it is merely a statement of a belief or expectation.

Records

Must have original copies and necessary records to show the commissioner or premiums collected, correspondences, written proposals, benefits, limitations, exclusions etc.

Be able to identify special ethical concerns that may occur when dealing with Senior Citizens regarding pretext interviews

No insurance institution, agent or insurance-support organization shall use or authorize the use of pretext interviews to obtain information in connection with an insurance transaction; provided, however, that a pretext interview may be undertaken to obtain information from a person or institution that does not have a generally or statutorily recognized privileged relationship with the person to whom the information relates for the purpose of investigating a claim where there is a reasonable basis for suspecting criminal activity, fraud, material misrepresentation or material nondisclosure in connection with a claim.

Prohibitions of free insurance

No insurer shall participate in any plan to offer or effect any kind or kinds of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property, real or personal or mixed, or services, without any separate charge to the insured for such insurance, nor shall any agent, broker, or solicitor arrange the sale of any such insurance. The provisions of this article shall not be applicable to insurance written in connection with subscriptions to newspapers of general circulation; nor shall it apply to insurance issued to credit unions or to members of credit unions in connection with the purchase of shares in such a credit union; nor shall it apply to insurance offered as a guarantee of the performance of goods, which insurance is designed to protect the purchasers or users of such goods; nor shall it be applicable to any title insurance or life or disability insurance written in connection with an indebtedness, the purpose of which insurance is to pay the balance of the indebtedness in the event of the death or disability of the person insured; nor shall it be applicable to any of the provisions of Part 5 (commencing at Section 12140), Division 2 of this code; nor shall it be applicable to insurance provided incidentally to the sale of services if the cost of the insurance to the seller of the services does not exceed the sum of one dollar ($1) per annum for each purchaser of those service

Tort

Private civil non contractual wrong through which a remedy through legal action may be sought

Conditional Contract

Requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligations.

Accelerated Benefits

Riders attached to life insurance policies which allow death benefits to be used to cover nursing or convalescent home expenses.

Insurance does what?

TRANSFERS the risk of loss from an individual or business entity to an insurance company.

Cal-GLBA financial code

The directors of a domestic mutual insurer may from time to time apportion and pay or credit to its members dividends only out of that part of its surplus funds which represents net realized savings, net realized earnings, and net realized capital gains, all in excess of a surplus equivalent to the aggregate of paid-in capital and unassigned surplus required by this code for the issuance of a certificate of authority to a capital stock insurer transacting the same classes of insurance.

utmost good faith

The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk.

Unearned Premium

The portion of premium for which policy protection has not yet been given.

Legal Purpose

The purpose of the contract must be legal and not against public policy.

Warranty Violation

The violation of a material warranty or other material provision of a policy, on the part of either party thereto, entitles the other to rescind.

insurance policy

The written instrument, in which a contract of insurance is set forth, is the policy.

Competent Parties

Those who are legally capable of entering into contracts.

Licensing

Unless exempt by the provisions of this article, a person shall not solicit, negotiate, or effect contracts of insurance, or act in any of the capacities defined in Article 1 (commencing with Section 1621) unless the person holds a valid license from the commissioner authorizing the person to act in that capacity. The issuance of a certificate of authority to an insurer does not exempt an insurer from complying with this article.

Misrepresentations

Untrue statements on the application

Be able to identify the Code specifications regarding producer application investigation, denial of applications, and suspension or revocation of license

Upon the filing of an application for a license in accordance with Article 4 of this chapter, the commissioner may make such investigation and require the filing of such supplementary documents, affidavits and statements as may be necessary to obtain a full disclosure of such information as will aid him in determining whether the prerequisites for the license have been met. If the applicant makes a showing satisfactory to the commissioner that he meets all such prerequisites, the commissioner, if the applicant be eligible therefor, may issue a certificate of convenience, and upon the applicant meeting any applicable examination requirements may issue a permanent license.

Agreement, Offer and Acceptance

a definite offer by one party and is accepted when the insurer's underwriter approves the application and issues a policy.

Be able to identify the Code provisions regarding a Life - Limited to the Payment of Funeral and Burial Expenses licensee acting as an agent for an insurer for which the agent is not specifically appointed

a licensed life agent may present a proposal for insurance to a prospective policyholder on behalf of a life insurer for which the life agent is not specifically appointed, and may also transmit an application for insurance to that insurer.A licensed life agent who is not specifically appointed for a particular life insurer may not (1) present a proposal to a prospective policyholder for insurance with that insurer or (2) transmit an application for insurance to that insurer if the insurer requires all its life agents to represent only that insurer or a group of affiliated insurers of which that insurer is a member or to submit risks to that insurer or group of affiliated insurers prior to submitting them to other insurers

Broker

a person who represents the insured in the process of purchasing or negotiating a contract of insurance

Material Representations

a statement that would alter underwriting and if intentional is considered fraud.

four major elements of a contract

agreement (offer and acceptance),competent parties, legal purpose,consideration

Legal Relationship of the Insurer or agency principal

an agent represents the insurer not the insured, any knowledge of the agent is presumed to be knowledge of the insurer. If the agent is working within the conditions of his/her contract the insurer is fully responsible. when the insured submits the payment to the agent it is the same as submitting a payment to the insurer.

Acceptance of a contract takes place when

an insurer's underwriter approves the application and issues a policy

fraud

an intentional misrepresentation or deceit with the intent to induce a person to part of something with value

Deferred annuity

annuity in which income payments begin some time after one year from the date of purchase. can be funded by a lump sum or through periodic payments, (can also be a flexible deferred annuity)

Commissioner of Insurance

can serve no more than two consecutive four year terms. cannot change the law but can enforce it.

lapse

cease being in force; become invalid

Insurance information and privacy protection act

concerned with access to, collection and distribution of a person's private or privileged information which may be necessary to obtain in connecting with application for insurance

Policy

contract between policy owner and an insurance company

Insurance IS what

contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent unknown event.

Intentional Tort

deliberate act that causes harm to another

Aleatory

exchange of unequal amounts or values (premium is small compared to the amount paid by the insurer n the event of the loss

What causes recession?

false material representation, concealment, violation of material warranty.

California Financial Information privacy act

gives consumers the final say in sharing their information, also restricts financial profiling.

Law of contracts

has to be modified to fit the needs of insurance

Producers responsibilities

has to make the call whether it will be profitable or not

Personal Contract

in general insurance contract is personal contract because they are between the insurance company and the individual

Persons include

individual human beings, associations, organizations, partnerships, and trusts.

Spectulative Risk

involves opportunity for either loss or gain (ex. gambling)

insurance company does what

issues policy to policy owner and pays benefit to the beneficiary

Right of Rescission for Concealment

know that either intentional or unintentional concealment entitles an injured party to rescission of a contract

Producer (or agent)

legal entity either human or corporate that acts on behalf of or in place of its principal.

Responsibilities to the applicant and the insured

legally obligated to treat applicants and insured's ethically. Because the insurer handles funds they have fiduciary (trust) responsibility. Illegal to commingle premiums and personal funds.

Contract of Adhesion (take it or leave it)

prepared by the insurer and either accepted or rejected by the insured.

Extension of Benefits

protects covered persons, employees or dependents who are disabled prior to discontinuance or termination of plan

Pure risk

refers to situations that can only result in a loss or no change

Independent Agent

represents several insurance companies but owns the records of the policies sold

unintentional tort

resulting in improper care (negligence)

California Code of Regulations (Also known as California Administration Code)

set of regulations issued by the department of insurance that identifies the standards for insurance code

Consideration

something of value exchanged for something else of value

Consideration

something of value that each party gives to the other

Warranty (can be expressed or implied)

statement that is considered a guarantee to be true

insurance rate

the amount an insurance company charges a policyholder for a certain amount of insurance

Grace Period

the period of time after a deadline or due date. After THREE months of premium has been paid the insured is entitled to 30 DAYS to pay any subsequent premiums.

Annuitant (must be a natural person)

the person receiving benefits or payments from the annuity whose life expectancy is taken into consideration and for whom the annuity is written.

owner (pays into the annuity)

the purchaser of the annuity contract, might not necessarily the one who receives the benefits. Has all rights such as naming the beneficiary and surrendering the annuity. (corporation, trust, or legal entity)

Materiality of concealment

the rule used to determine the importance of a misrepresentation.

When is a representation false?

when the facts fail to correspond with its assertion or stipulations If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false.

Contracts

written agreements that are legally enforceable by law (between two or more parties)

Application

written request for coverage