( Chapter 1 ) Basics of life and health insurance
What is a physical hazard?
Physical conditions that increase loss. Ex Icy/slippery roads
What are the THREE types of hazards?
Physical, Moral, Morale
What is estoppel?
Prevents an insurer from changing or denying a fact.
Which risk does Insurance accept/handles ONLY ?
Pure Risk
What is risk?
Uncertainty of financial loss
What is a peril?
cause of loss
What is concealment?
withholding information
What is pure risk?
Absolute loss
What is consideration?
Agreement to pay premium for insurance in return.
What is utmost good faith?
All parties are relied upon to be honest to each other.
What are the five methods of handling and managing risk?
Avoidance, Assumption, Sharing, Transfer, Reducing
Are preferred risk and standard risk acceptable to an insurer?
Yes !
What is misrepresenation?
False statement given.
What is a warranty in an insurance contract?
Guarantee of the policy
Insurance is made from ?
Law of large numbers.
Is substandard risk accepted by an insurer? If, so is their payment premium the same?
Maybe. Pays higher premium.
What is indemnity?
Reimbursement/refund for a covered loss.
What is adverse selection?
Selection of risks that will have a negative impact on an insurance company.
What is representation?
Statement of fact that's true to ones knowledge.
What is waiver?
giving up a right
Which risk is insurable?
pure risk
What is a hazard?
Conditions that can cause a loss.
What is reinsurance?
Insurance for the insurer.
What is insurable interest?
Insurance on a person or thing that maybe any finical loss to them.
What is a morale hazard?
Carelessness to a loss. Attitude problem
What is speculative risk?
Chance of gain or loss.
what is underwriting?
Classification and rating of risk that allows insurance to evaluate and select/reject persons for a policy
What is the FOUR general rules of contract law? [CLOC]
Competent, Legal, Offer, Consideration C > Understanding consequences L > must be insurable legally O > Accept the policy given C > insured will pay the premium given
What is the FOUR parts of a insurance contract? [DICE]
Declarations, Insuring Agreement, Conditions, Exclusions D > policy details. coverages and rates I > obligations for the insurance company to follow C > rights and duties of both parties E > details of what the contract will not cover
What is a moral hazard?
Dishonesty on an application. Ex: faking accidents