Primerica study set

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material

What 2 elements are necessary for a life insurance contract to have legal purpose

Insurable interest and consent

What entities make up the Medical Information Bureau?

Insurers

What are the 3 types of hazards ?

Physical, Moral, Morale

In case of a loss, the indemnity provision in insurance policies

Restores an insured person to the same financial state as before the loss Indemnity (sometimes referred to as reimbursement) is a provision in an insurance policy that states that in the event of loss, an insured or a beneficiary is permitted to collect only to the extent of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract.

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

In an insurance, when is the offer usually made on a contract ?

When the insurance application is submitted

In forming an insurance contract, when does an acceptance usually occur?

When the insurer approves a prepaid application

When does the policy go into effect?

When the policy is delivered and the premium is paid

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

avoidance Risk avoidance is elimination of risk of loss by avoiding any exposure to an event that could give rise to such loss.

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

express authority Express powers are written into the contract between the insurer and the agent.

Conditions that increase the chance of a loss are known as what?

hazards

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

ownership Mutual companies are owned by policyholders, while stock companies are owned by stockholders.

Which type of whole life policy would have highest premium for a 25 yr old applicant ?

10 Pay life The shorter the premium paying period, the higher the annual premium will be

Which of the following insurers are owned by stockholders?

Stock Only stock insurance companies are owned and controlled by stockholders.

A nonparticipating policy is issued by a

Stock company Stock companies- nonparticipating policies Mutual companies-participating policies

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

Reduction - Steps taken to prevent losses from occurring are called risk reduction.

An applicant conceals relevant health information on the application. The applicant presents what type of hazard?

moral

For the purpose of insurance, risk is defined as the

the uncertainty or chance of loss

What is the main purpose of requiring licenses for persons involved in transacting insurance?

Protect the public

Grace Period

Protects against the unintentional lapse of a policy allowing the policy to continue in force for a specified time after the premium is due

What documentation grants express authority to an agent?

Agent's contract with the principal The principal grants authority to an agent through the agent's contract.

What document is required for an insurance company to transact insurance ?

Certificate of Authority

Insurance is a contract that protects the insured from what?

Loss

Hazard is best defined as

Something that increases the risk of loss Hazards are conditions or situations that increase the probability of an insured loss occurring.

Insurance interest must existe at the time of

Application

What are the strategies used by underwriters to prevent adverse selection

Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher Rate

Representations are statements made by the applicant for insurance that are

True to the best of the applicants knowledge Representations are believed to be true to the best of the applicant's knowledge; they are not guaranteed to be true