General Insurance

Concealment

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of:

Offer

An applicant submitting an application to the insurer for underwriting approval is called an

Foreign insurer

An insurer with a home office in another state is a

Reciprocal

· Which of the following insurance options would be considered a risk-sharing arrangement?

Stock

· Which of the following insurers are owned by stockholders?

Warranty

· Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Private

· ____ insurers may be authorized to transact insurance by state insurance departments

Sharing

· _____ is a method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group. A reciprocal insurance exchange is a formal risk-sharing arrangement

Taxes

The Major difference between government programs and private insurance programs is that the government programs are funded with _____ and serve national and state social purposes, while private policies are funded by premiums

Foreign

· An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Captive agent

· An insurance producer who by contract is bound to write insurance for only one company is classified as a/an

Mutual

· An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Risk retention

· Reducing expenses and improving cash flow, increasing claim reserving and claims settlements, and funding for losses that cannot be insured are the purposes of:

Deductibles

· Risk retention is the planned assumption of risk by an insured through the use of _____, co-payments, or self-insurance. It is also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays.

Co-payments

· Risk retention is the planned assumption of risk by an insured through the use of deductibles, ______, or self-insurance. It is also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays.

Self-insurance

· Risk retention is the planned assumption of risk by an insured through the use of deductibles, co-payments, or _______. It is also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays.

Consideration

· An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

insurable risk

· Definite and Measurable - A loss that is specific as to the cause, time, place and amount. An insurer must be able to determine how much the benefit will be and when it becomes payable. This is an example of:

Fiduciary responsibility

· Pertaining to insurance, promptly forwarding premiums to the insurance company is the definition of

Indemnity

· Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Pure risk

A situation in which a person can only lose or have no change represents

Certificate of Authority

A state-issued document empowering an insurance company to become an admitted insurer is called

Peril

A tornado that destroys property would be an example of which of the following

Apparent

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Speculative risk

Events in which a person has both the chance of winning or losing are classified as

Hazards

Events or conditions that increase that chances of an insured loss occurring are referred to as

The uncertainty or chance of loss

For the purpose of insurance, risk is defined as

Larger

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become:

Insurable Risk

Not Catastrophic - Insurers need to be reasonably certain their losses will not exceed specific limits. That is why insurance policies usually exclude coverage for loss caused by war or nuclear events: there is no statistical data that allows for the development of rate that would be necessary to cover losses from events of this nature. This is an example of

Insurable Risk

Randomly selected and large loss exposure - There must be a sufficiently large pool of the insured that represents a random selection of risks in terms of age, gender, occupation, health and economic status, and geographic location. This is an example of

Pure risk and Speculative risk

The risk of loss may be classified as

Domestic

· Which of the following best describes an insurance company that has been formed under the laws of this state?

Participating

· A ______ insurance policy may pay dividends to the policyholder

Commingling

· A producer who fails to separate premium monies from his own personal funds is guilty of

Misrepresentations

Untrue statements on the application are considered ________ and could void the contract. Material _________ is a statement that, if discovered, would alter the underwriting decision of the insurance company

Principle

What is the term for the entity that an agent represents regarding contractual agreements with third parties?

Fraternal benefit society

· Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?

insurable risk

Statistically predictable - Insurers must be able to estimate the average frequency and severity of future losses and set appropriate premium rates. (In life and health insurance, the use of mortality tables and morbidity tables allows the insurer to project losses based on statistics.) This is an example of

Acceptance

_____ occurs when an insurer's underrating approves coverage

Risk Retention

· _____ is the planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance. It is also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays. The purpose of retention is: 1) To reduce expenses and improve cash flow; 2) To increase control of claim reserving and claims settlements; 3) To fund for losses that cannot be insured.

Recession

When an insurance applicant intentionally fails to communicate information that the insurer needs, the insurer has the right to cancel the policy even if the failure to communicate is discovered after the policy has been issued. This act is called ___, and the insurer is said to have rescinded the policy. Upon _____, the policyowner loses any right to file a claim on the policy, and the insurer refunds all money paid.

Government

______ insurers provide insurance in the areas where private insurance is not available, called social insurance programs. _____ insurance programs include Social Security, Medicare, Medicaid, Federal Crop insurance and National Flood insurance

Material misrepresentation

· An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year, for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Mutual

· _______ Companies are owned by the policyowners and issue participating policies. With participating polices, policyowners are entitled to dividends, which, in the case of Mutual companies, are a return of excess premiums and are, therefore, nontaxable. Dividends are generated when the premiums and the earnings combined exceed the actual cost of providing coverage, creating a surplus. Dividends are not guaranteed.

Express

· ________ authority is the authority a principal intends to grant to an agent by means of the agent's contract. It is the authority that is written in the contract.

Insurable Risk

· Due to chance - A loss that is outside the insured's control. This is an example of:

Unilateral

· If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Aleatory

· Insurance contracts are _____, which means there is an exchange of unequal amounts or values. The premium is paid by the insured is small in relation to the amount that will be paid by the insurer in the event of a loss.

Adhesion

· Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Fraud

· Intentional misrepresentations on an insurance application is known as

Self-insurance

· It is also known as _______ when the insured accepts the responsibility for the loss before the insurance company pays.

Premiums

· The Major difference between government programs and private insurance programs is that the government programs are funded with taxes and serve national and state social purposes, while private policies are funded by _____.

Express authority

· The authority granted to an agent through the agent's contract is referred to as

Consideration

· The binding force in any contract is the ________. ________ is something of value that each party gives to the other. The ________ on the part of the insured is the payment of premium and the representations made in the application. The ________ on the part of the insurer is the promise to pay in the event of loss.

Perils

· The causes of loss insured against in an insurance policy are known as

Avoidance

· The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called

Fiduciary responsibility

· The trust that a client places in the producer in regard to handling premiums is known as

Reinsurance

· What method do insurers use to protect themselves against catastrophic losses?

Transfer

· When an individual purchases insurance, what risk management technique is he or she practicing?

Alien insurer

· When transacting business in this state an insurer formed under the laws of another country is known as a/an

· ________ are statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true. For insurance purposes, representations are the answers the insured gives to the questions on the insurance application.

Representations

Unilateral contract

· In a ______, only one of the parties to the contract is legally bound to do anything. The insured makes no legally binding promises. However, an insurer is legally bound to pay losses covered by a policy in force.

Implied

· Which authority is NOT stated in an agent's contract bus is required for the agent to conduct business?