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Reinsurance

A contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities.

Under what conditions can you transfer a person insurance policy to another person?

A personal insurance contract is written between an insurance company and a individual and the company has a right to decide whom it will conduct business. Must obtain the written consent of the insurer to transfer.

Reciprocal Insurer

A reciprocal insurance exchange is a formal risk sharing arrangement.

In insurance transactions, fiduciary responsibility means?

Handling insurer fund in a trust capacity.

The Notice of Claims provision requires a policyowner to

Insured has 20 days to report loss

Which of the following entities has the authority to make changes to an insurance policy?

Insurer's executive officer

Certificate Authority

Is required in order to transact insurance

In a group policy, who is issued a certificate of insurance?

The individual insured The individuals covered under a group insurance contract are issued certificates of insurance. The certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy.

Agent's contract with the principal

What documentation grants express authority to an agent?

Reinstatement Provision

Applies to the timeframe that an insurer hasn't paid premium but wants the policy back. If you havent heard back in 45 days, then the policy has been reinstated

Express Authority

Express powers are written into the contract between the insurance and the agent, express authority is the authority a principal intends to grant to an agent by means of the agent's contract

Optionally Renewable Policies

Health: The renewability provision in an _________ policy gives the insurer the option to terminate the policy on a date specified in the contract.

Retention usually results from three basic desires of the insured.

To reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured

When an individual purchases insurance, what risk management technique is he or she practicing?

Transfer...insurance is a transfer of the risk of financial loss from a covered peril from the insured to the insurance company

A participating insurance policy may do which of the following?

Participating policy enables you as a policyholder to share profits of the insurance company/ Pay dividends to the policyowner. A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

What is a captive producer?

A person who sells many types of policies for only one insurance company

Payment of Claims Provision

The payment of claims provisions states that the claims must be paid to the policy owner unless death proceeds need to be paid to beneficiary

Which of the following is not the goal of risk retention?

To minimize the insured's level of liability in the event of loss.

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

Pure Risk

In order to be characterized as pure risk, loss must be due to chance, definite, measurable, and predictable, but not catastrophic. Not all risk is insurable.

Aleatory Contract

Insurance contracts are aleatory, which means there is an exchange of unequal amounts or values. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss.

Mutual Companies

Insurance organizations that have no capital stock, but are owned by the policyholders. Nontaxable, dividends not guaranteed