review questions Ms insurance

What is an Attending Physician's Statement and when is it required?

A report by a physician, hospital, or medical facility who has treated, or is currently treating, a person seeking insurance.

Who regularly publishes guides to insurance companies' financial integrity?

Am Best; Fitch; Standard and poor's; Moody's; Weiss

How does the premium mode affect the total premium paid for insurance for the year?

As a general rule, more frequent modes of premium payment tend to cost less per year payment. However, more payments also tend to cost more total, for instance, an insurer might charge $150 per month, $400 per quarter, $700 per semi- annual payment, or $1,250 per year for your policy.

What is the difference between a consumer report and an investigative consumer report?

As a rule of thumb, the distinction between the two types of investigations can be thought of as simply verifying the specific facts about education, employment, or other information the applicant has provided to the employer (Consumer Report) versus obtaining more general information through interviews. (Investigative consumer report).

What are the five methods of risk management?

Avoidance Retention Sharing Reduction Transfer

Who is required to sign the application?

Both the agent and the proposed insure (usually the applicant)

Explain the concept of reasonable coverage expectations

Courts often grant coverage to an insured even when the express language of the policy often does not provide coverage.

What are the elements of insurable risks?

Due to chance Definite and measurable Statistically predictable Not catastrophic Randomly selected and large loss exposure

what is the difference between private and government insurers?

Either the federal government or state government manage the public medical insurance marketplace, while private companies run private exchanges. While government are usually limited to qualified health plans (ACA)

How is the insurance company able to protect such a large number of people who could potentially suffer a loss?

Insurance companies protect themselves against losses due to adverse selection and moral hazards by using deductibles.

Name 3 instances in which insurable interest exist?

Insuring a policy owner's life Insuring the life of a family member (a spouse or a close blood relative); or Insuring the life of a business partner, key employee, or someone who has a financial obligation to the policy owner (such as a debtor or creditor)

Explain the concept of adverse selection.

Insuring all risks that are more prone to losses than the average risk.

What is the purpose of the agent's report?

It is used by the agent to discuss his or her personal observations concerning the proposed insured. It is the most important source of information available to the company underwriters.

What are the three factors that determine the premium for a particular policy?

Mortality Interest Expense

When does an insurance policy go into force if there is no premium and if there is a premium?

NO premium = NO coverage.

How does a substandard risk policy differ from a standard risk?

Standard risk policy applicants are average risk and are acceptable at standard rates while substandard risks are not applicable to standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits.

What is the difference between a stock company and a mutual company?

The biggest difference is the ownership of each company. Mutual Insurance Companies are owned by policyholders and Stock Insurance Companies are owned by stockholders

How do the courts treat ambiguous contracts?

The court will look beyond the language of the contract itself to resolve the ambiguity and enforce the contract.

At what point does coverage begin when an agent issues a conditional receipt?

The date of the application or the date of the medical examination.

Describe the difference between Part 1 and Part 2 in the application.

The first one is all your general information such as name, address, DOB, etc. While the second one is medical information such as medical background present health etc.

Describe the concept of consideration on the part of an insured and how it differs from consideration on the part of the insurer.

The insured's consideration is the premium and statements on the application while the insurer's is the promise to pay for losses.

What is the purpose of the Fair Credit Reporting Act?

To ensure that all records are confidential, accurate, relevant, and properly used. It also protects consumers against circulation of inaccurate or obsolete personal or financial information.

How can the insurance company use the information obtained from the MIB?

To further investigate impairment areas of appliant.

What does indemnify mean?

To restore an insured to the same financial status as before a loss

When do insurers usually require an HIV test?

When an applicant is applying for a large amount of coverage, or for any increased and additional benefits.

When is a policy considered delivered?

When the insurer relinquishes control of the policy by mailing it to the policy owner, legally the policy is considered delivered.

What is a contract and what is its purpose?

an agreement between two or more parties enforced by law. The purpose would be to leave you in the same financial position you were in immediately prior to the incident leading to an insurance claim or to fulfill a legal necessity.

What us an exclusive agency system?

an insurance distribution system through which agents represent only one company or a group of companies under similar management.

If the insured intentionally answers any questions on the application for insurance untruthfully, and the information is material to the insurance, what type of statements are these? Can they void a contract?

misrepresentations and yes

Which risk classification typically qualifies for lower premiums?

preferred risks

what is underwriting?

risk selection and classification process involves careful analysis of many different factors to determine the acceptability of applicants for insurance.

What does representation mean?

statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true.

How does representation differ from warranty?

Representations are not always guaranteed to be true while warranties are.