Life insurance chapter 1
in insurance an offer is usually made when
an applicant submits an application to the insurer
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
apparent or perceived
a producer who fails to separate premium monies from his own personal funds is guilty of
commingling
what term best describes the act of withholding material information that would be crucial to an underwriting decision
concealment
an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. the insurer violated what insurance principle.
consideration
binding force in any contract is
consideration
something of value that is transferred between the two parties to form a legal contract
consideration
the application given to a prospective insured is not in what part in a policy
consideration
The authority granted to an agent through the agent's contract is referred to as
express
written into the contract between the insurer and the agent
express powers (express authority)
refers to a position of trust. when an agent is handling the premiums that belongs to an insurance company they are acting in a what capacity
fiduciary
the requirement that agents not commingle insurance monies with their own funds is known as
fiduciary
an insurance company is domiciled in Montana and transacts insurance in WY. which term best describes the insurers classification in WY
foreign
speculative risk
gambling is an example
give rise to a peril
hazards
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
implied
the loss must be catastrophic is not a characteristic of an
insurable risk
What do individuals use to transfer their risk of loss to a larger group?
insurance
based on the principle of indemnity
insurance
based on the spreading of risk (risk pooling) and the law of large numbers
insurance
transfers the risk of loss from and individual to an insurer
insurance
basis for a claim against an insurance policy
loss
insurance is a contract by which one seeks to protect another from
loss
the reduction decrease or disappearance of value of the person or property insured in a policy by a peril insured against is know as
loss
which of the following is the basis for a claim against an insurance policy
loss
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company.
material misrepresentation
a tendency toward increased risk
moral hazard
an individual's tendency to be dishonest would be indicative of a
moral hazard
a person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard
morale
an indifference to loss
morale hazard
indifferent to loss, shows carelessness
morale hazard
an insured purchase 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. what type of insurer did the insured purchase the policy
mutual
on a participating insurance policy issued by a mutual insurance company dividends paid to policyholders are
not taxable since the IRS treats them as a return of a portion of the premium paid
pay dividends to owner based upon actual mortality cost interest earned and costs
participating insurance policy
a tornado that destroys property is an example of
peril
cause of loss insured against in an insurance policy
peril
physical condition is a
physical hazard
what is not an example of risk retention
premiums
grants authority to an agent through the agents contract
principal
pertaining to insurance, what is an example of a producers fiduciary responsibility
promptly forwarding premiums to the insurance company
the risk of loss may be classified as
pure and speculative risk
insurable because it involves a chance of loss only
pure risk
to be characterized as what risk the loss must be due to chance, definite, measurable and predictable but not catastrophic
pure risk (insurable risk)
insurance is the transfer of
risk
uncertainty regarding a financial loss
risk
steps taken to prevent losses from occurring
risk reduction
Planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.
risk retention
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
sharing
a participating insurance policy may do what
Pay dividends to the policyowner
Who might receive dividends from a mutual insurer?
Policyholders
takes place when an insurers underwriter approves the application and issues a policy
acceptance
which documentation grants express authority to an agent
agents contract with the principal
domiciled in one country and transacts insurance in another
alien
A promise to pay in the event of a loss
Consideration on the part of the insurer
not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization
Fraternal benefit society
not insurable because it involves a chance of gain
speculative risk
insurance company owned and controlled by stockholders
stock
in terms of parties to a contract which of the following does not describe a competent party
the person must have at least completed secondary education
when an individual purchases what risk management he/she practicing
transfer