General insuarance

Authority granted to an agent through the agents contract is referred to as?

Express Authority, expressed powers are written into the contract between the insurer and the agent.

funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. If all funds are paid out, no Dividends are paid.

Mutual insurer

what is material misrepresentation?

a statement by the applicant that, upon Discovery, what effect the underwriting decision of the insurance company.

insurance is a contract by which one seeks to protect another from?

Loss

all of the following are examples of risk retention

Self Insurance, deductibles and co-payments. Retention is a plan to sumption of risk, or acceptance of responsibility for the loss by an insured through the use of deductibles, co-payments or Self insurance

homogeneous

a large number of units having the same or similar exposure to a loss. the basis of insurance is sharing risk among the members of a large homogeneous group was similar exposure to loss.

which of the following is the closest term to an authorized user?

admitted. interesting to meet the state's Financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.

which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

indemnity. the principle of Indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is written with greater benefit limits.

in insurance, and I first usually made when?

the completed application is submitted. In Insurance, the offers usually made by the applicant in the form of the application. Acceptance takes place when an insurance underwriter approved the application issues of policy.

consideration in a policy

something given or taken between both parties. I promise to pay my premium at the time of application and you promise to pay covered losses it's something valued between two parties.

what is a statement that is guaranteed to be true, and if untrue, a breach an insurance contract?

warranty. A warranty and insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranty but representations. Representations are statements that are true to the best of the applicants knowledge.

consideration

what does the consideration. Consideration is something of value that each party gifts the other the consideration on the part of the insured as a payment of premium and their representations made in the application. The consideration on the part of the insured is a promise to pay in the event of loss.

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

when an insurance underwriter approves the coverage.

what documentation grants Express authority to an agent?

agents contract with the principal. The principal Grant authority to an agent through the agents contract.

what is the term for the entity that agent represents regarding contractual agreements with third parties?

an agent represents the principal, acting on the entities behalf and contractual agreements with third parties.

the causes of loss insured against in an insurance policy are known as

perils

what insurance options would be considered a risk-sharing arrangement?

reciprocal period when insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of the reciprocal.

for the purpose of insurance, risk is defined as

the uncertainty or the chance of loss occurring, is it basic reason for buying insurance.

in case of a loss, the indemnity provision in insurance policies restores and 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.

which statement regarding insurable risk is not correct?

Insureds cannot be randomly selected. Cracking Insurance must not be mandatory, selecting Insurance randomly will help the insured to have a fair proportion of good risks to poor risk.

Mutual companies

Mutual companies are owned by the policy owners and issue participating policies. With participating policies, policy owners are entitled to dividends, which, in the case of mutual companies, our return of excess premiums and are therefore not taxable. Dividends are generated when the premiums and the earnings combined exceed the actual cost of providing coverage, creating a surplus. Dividends are not guaranteed.

what is misrepresentation?

a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company.

what are the four essential elements of a legal contracts?

offer and acceptance, consideration, competent parties, and legal purpose.

which of the following is an example of a producer fiduciary duty?

the dress that a client places in the producer in regard to handling premiums. I'm agent Acts in a fiduciary capacity, based upon trust and confidence, when handling the financial affairs of their customers, including the handling of premiums.

competent parties

the parties to a contract must be capable of entering into a contract in the eyes of the law. Generally this requires that both periods be of legal age, mentally competent to understand the contract and not under the influence of drugs or alcohol

when transacting business in the state and insurer formed under the laws of another country is known as?

an alien insurer is defined as an insurer formed under the laws of another country. insurance companies are classified according to the location of incorporation. Regardless of where an insurance company is incorporated, Miss obtain a certificate of authority before transacting Insurance within the state. A dumb mistake and sure is an insurance company that is Incorporated in this state in most cases of companies home offices in the state in which it was formed period of foreign and sure is an insurance company that is Incorporated in another state or territorial possession, such as Puerto Rico Guam or American Samoa. An alien insurer is an insurance company that is incorporated outside the United States.

apparent

apparent Authority also known as perceived as thority, is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

what must an insure obtain in order to transact Insurance within a given state?

certificate of Authority. All insures domestic, foreign or alien must obtain a certificate of authority within a given state.

in order for an insurer to legally transact insurance, it must obtain what?

certificate of authority.

what term best describes the act of withholding material information that would be crucial to an underwriting decision?

concealment. concealment occurs when a person with holds a material fact that is crucial to making a decision. in insurance, this involves withholding information that would be important for making underwriting decisions.

hazards

events or conditions that increase the chances of an insured loss occurring. conditions such as lifestyle existing health, or activities such as scuba diving or hazards and may increase the chance of loss occurring.

a moral hazard is someone who has an indifferent attitude towards an insurance company he's careless or irresponsible because he knows his loss will be covered by insurance

fact.

which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an Affiliated Lodge or religious organization?

fraternal benefit Society. Fraternal Insurance operate on the basis of a lodge or charitable organization, but they may also sell formal insurance plans for the benefit of their members. Reciprocal insurers are also associations that provide insurance for their members, but they are formed only for the purpose of providing insurance.

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

insurance is a mechanism whereby an insured is protected against lost by buy a specified future contingency or Peril in return for the present payment of Premium. Because many other individuals with the same or similar risk of loss or paying premiums, funds are available to indemnify those who actually suffer that loss.

the reduction, decrease, or disappearance of value of the person or property insured in a policy by a Peril insured against is known as?

loss

what is an example of apparent authority of an agent appointed by an insurer?

the agent accepts a premium payment after the end of the grace period. An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power. The power to use Business Cards stationary and signage maybe either Express, written, or implied not written, but neither taste it is allowed.

legal purpose

the purpose of the contract must be legal and not against public policy. To ensure illegal purpose of a life insurance policy, for example, it must have both insurable interest and consent. A contract without legal purpose is considered void, and cannot be enforced by any party.

in insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privileges does the insurer have in order to balance this?

the right to determine the wording of a policy period in contracts in which only the insurer has the right to determine the wording of a policy, the policyholder will receive benefits denied due to a contract ambiguity.

for the purpose of insurance, risk is defined as?

the uncertainty or chance of loss. risk, or the chance of loss occurring, is the basic reason for buying insurance.

when an individual purchases Insurance what risk management techniques 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.

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

exposure

exposure is a unit of measure used to determine rates charged for insurance coverage. In life insurance, all of the following factors are considered in determining rates, the age of the insured, medical history, occupation and sex.

what is morale hazard?

morale hazards arise from a state of mind that causes indifference to loss, such as carelessness. driving recklessly is an example.

following a career change an insured is no longer required to perform any physical activities so he walks 45 minutes and eliminates any food from its diet which method of dealing with risk does the scenario described?

reduction the insurance change in lifestyle and have it will likely reduce the changes of health problems. since we usually cannot avoid risk entirely we often attempt to lessen the possibility or severity of a loss. Reduction would include action such as installing smoke detectors in our homes, having an annual physical to detect health problems early, or perhaps making a change in our lifestyles.

what is speculative risk?

speculative risk involves the opportunity for either lost or gained. And example of speculative risk is gambling. These types of risks are not insurable.

which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

stock

Hazard

HAZARDS are conditions or situations that increase the probability of an insured loss occurring. Hazards are classified as physical hazards, moral hazards or morale hazards. Conditions such as lifestyle and existing health, or activities such as scuba diving, are hazards and may increase the chance of a loss occurring. PHYSICAL hazards are individual characteristics that increase the chances of the cause of loss. Physical hazards exist because of a physical condition, past medical history, or condition at Birth such as blindness. MORAL hazards are Tendencies towards increased risk. Moral hazards involves evaluating the character and reputation of the proposed insured. Moral hazards refer to those applicants May lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer. MORALE hazards are similar to moral hazards, except that they arise from a state of mind that causes indifference to loss, such as carelessness. Actions taken without forethought may cause physical injuries.

certificate of authority

necessary for transacting business in a specific state. It is equivalent to an insurance license. It is issued by the State Department of Insurance.

what is the term for the entity that an agent represents regarding contractual agreements with third parties?

principal an agent represents the principle, acting on the entities behalf and contractual agreements with third

what is pure risk?

pure risk refers to situations that can only result in a loss or no change. There is no opportunity for financial gain. Pure risk is the only type of risk that insurance companies are willing to accept.

what is a factor that is not considered by an underwriter when determining the premium rates for an individual seeking insurance?

race. age, medical history, and sex provide sound statistical data for determining the probability of a loss. Race, religion, sexual orientation, Etc., are some of the factors that cannot be used because there is not sound statistical data to show that they affect the probability of loss, therefore they are considered to be discriminatory.

if a court-ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

reasonable expectation, because of advertising or sales literature or statements by an agent, and insured can reasonably expect the coverage, the courts have held that the insurer must provide that coverage.

what is the goal of risk retention?

to reduce expense says and improve cash flow, to increase control of claim reserving and claim settlement, and to fund losses that cannot be insured.

what is the consideration in a policy

consideration is something of value that is transferred between the two parties to form a legal contract.

insurable risks involved the following characteristics

DUE TO CHANCE: a loss that is outside of the insureds control. DEFINITE AND MEASURABLE: A losS that is specific as to the cause, time, place, and amount. And ensuring must be able to determine how much the benefit will be and when it becomes payable. STATISITICALLY PREDICTABLE: insurers must be able to estimate the average future losses except for free premium rates. NOT CATASTROPHIC: insurance needs to be reasonably certain their losses will not exceed specific limits. That is why insurance policies usually exclude coverage for lost caused by war or nuclear events. There's no statistical data that allows for the development of rights that would be necessary to cover losses from events of this nature. RANDOMLY SELECTED AND LARGE LOSS EXPOSURE: there must be a sufficiently large pool of the insured that represents a random selection of risks in terms of age, gender, occupation, health and economic status, and geographic location.

warranties

a warranty is an absolutely true statement upon which the validity of the insurance policy depends. Breach of warranties can be considered grounds for voiding the policy or a return of Premium. Because of such a strict definition, statements made by applicants for life and health insurance policies, for example, are usually not considered warranty, except in cases of fraud.