Life and Health Insurance

What is the purpose of the agent,s report during the application process?

It provides the agent's observations about the proposed insured that may help in the underwriting process.

What is the best way to handle incomplete insurance applications?

Return the application to the applicant for completion.

What type of beneficiary can be changed at any point by the policy owner?

Revocable

What is the main responsibility of a company's underwriting unit?

Risk Selection

What are the four elements of an insurance contract?

Agreement (offer abd acceptance), consideration, competent parties, and legal purpose.

What is a warranty?

An absoluty true statement that, if breached, may void an insurance contract.

Who is considered a nonresident agent?

An agent who resides and is livensed in another state, but is authorized to transact insurance in Florida.

Agent

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of the insurer.

Field Underwriter

An insurance agent who conducts an initial policy solicitation and application (the company's front line of underwriting)

What is third-party ownership?

An insurance arrangement in which the policy owner and the insured are not the same person.

Whom does an insurance agent represent?

An insurance company

If an insurer meets the states financial requirements and is approved to transact business in the state, it is consdered what type of insurer?

Authorized

Policy Provision

A clause that stipulates the rights and obligations under an insurance contract.

What is a unilateral contract?

A contract in which only one of the parties is legally bound to fulfil its obligations.

Contract of Adhesion

A contract prepared by one party that must be accepted as written or be rejected by the other party.

Certificate of Insurance

A document issued to insureds undwe a group plan that states the coverage being issued, and indicates the coverage type and amounts.

Premium

A payment by the policy owner to the insurance company to keep the policy in force.

Who is an insurance agent?

A person authorized to sell, solicit, and negotiate insurance contracts.

Fiduciary

A producer who handles insurer's funda in a trust capacity.

Which of the two types of policy assignments require transfer of all ownership rights and a policy to a third-party?

Absolute assignment.

What information are the members of the medical information bureau required to report?

Adverse medical information about the applicants or insureds.

What type of licensee represents the insurance company?

Agent

What is Solvency?

An insurer's ability to meet its financial obligations to policy owners,insureds, and beneficiaries.

Who must be a member of a state insurance guaranty association?

Any authorized insurer within a state.

What is an unfair trade practice?

Any fraudulent, deceptive, or dishonest business practice that is prohibited by statutes and regulations.

If an underwriter requires extensive information about the applicants medical history, what report will be best serve this purpose?

Attending Physician's statement.

Peril

Cause of loss

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

Complete a new application or ask the applicant to initial the correction on the original application.

What are agents required to do in order to renew their license?

Complete required continuing education hours.

What are the three types of agent authority?

Express, implied, and apparent.

Suitability

Factors that determine if an insurance probuct is appropriate for a particular customer.

The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?

Fiduciary

What type of policy issues certificates of insurance to the insureds?

Group policies

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

Hazards

Who is responsible for paying the cost of a medical examination required in the process of underwriting?

Insurer

What entities make up the medical information bureau (MIB)?

Insurers

What are the five characteristics of an ideally insurable risk?

Loss must be: 1. Due to chance 2. Definate abd measurable 3. Statistically predictable 4. Not catastrophic 5. Coverage cannot be mandatory

What illegal act does a producer commit when representing a policy in a more favorable light than the policy really is?

Misrepresentation

Who may share in the commissions from the sale of a life insurance policy?

Only producers properly licensed for the type of insurance transaction (ex. Life insurance agents may share commissions for life insurance transactions)

What is the term for the causes of loss insured against in an insurance policy?

Peril

What document describes the specific information about a policy?

Policy Summary

Disclosure

Providing sufficient information to help someone make an informed decision.

A situation in which a person can only experience a loss and no gain represents what type of risk?

Pure Risk

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

Nonrenewal

Termination of a policy by an insurer on the anniversary or renewal date.

What law protects consumers from the circulation of inaccurate or obsolete information?

The Fair Credit Reporting Act.

Whose responsibility is it to determine that all of the questions on an insurance application are answered?

The agent

Insurer

The company that issues an insurance policy.

Who must be notified of the producers change of address?

The department of Insurance

Who is responsible for the contents of insurance advertisements?

The insurance company.

Insured

The person covered by the insurance policy.

Policy Owner

The person entitled to exercise the rights and privileges in the policy.

What is the entire contract in health insurance underwriting?

The policy with riders and endorsements, plus a copy of the application.

What is underwriting?

The risk selection and classification process.

Adverse Selection

The tendency of risks with higher probabily of loss to purchase and maintain insurance more often than the risks who represent lower probability of loss.

Concealment

The withholding of known facts that, if material, can void a contract.

What is the purpose of a free-look period?

To allow the insured to return the policy and get a full refund (if done during the free-look period)

What is the purpose of a cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance.

What is the purpose of the Florida Guaranty guarantee association?

To protect policy owners, insurance and beneficiaries from financial losses caused by insolvent insurers.

What is the main purpose for requiring a person to be licensed to transact insurance?

To protect the general public.

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Underwriting

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

When the insurance application is submitted.

When should an agent obtain a statement of good health from the insured?

When the premium was paid upon policy delivery rather than at the time of application.

Representation

A statement made by the applicant on the insurance application that is believed to be true.

Rider

A written modification attached to a policy that increases or decreases coverage and/or premiums.

What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Law of Large Numbers