Types of Insurance Policies

Morale

A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?

What are the four elements of an insurance contract?

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

What is a warranty in an insurance contract?

An absolutely true statement upon which the validity of insurance contract is based.

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

Authorized or admitted

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

hazards

What type of report provides information about the applicant's hobbies, habits and financial status?

inspection report

What do individuals use to transfer their risk of loss to a larger group?

insurance

Insurance is a contract that protects the insured from what?

loss

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

loss

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

moral

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

peril

The insurer organized to return a profit to the stockholders is what type of insurer?

stock company

Who owns stock companies?

stockholders

According to the Law of Agency, a principal is represented by whom?

Agent or producer

What entities make up the Medical Information Bureau?

Insurers

For the purpose of insurance, what is risk?

Uncertainty of loss

What are the three types of agent authority?

express, implied, apparent

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

Insurable interest and consent

What are the five characteristics of an ideally insurance risk?

Loss must be 1) due to chance 2) definite and measurable 3) statistically predictable 4) not catastrophic, and 5) coverage cannot be mandatory

Three types of hazards

Physical, Moral, Morale

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

What is the best way to handle incomplete insurance applications?

Return the application to the applicant for completion

If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?

Send the application back to the applicant for signature

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

When it is intentional and material

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

When the insurer approves a prepaid application

When does an insurance policy go into effect?

When the policy is delivered and the premium is paid

When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?

adverse selection