General Insurance
Which of the following is NOT true regarding a Certificate of Authority?
A- it is issued to group insurance participnts. Other options which are true(it may be necessary for transacting business in a specific state, it is equivalent to an insurance liscense, It is issued by the state department of insurance)
Documentation that grants express authority to an agent?
Agents contract with the principal.... Principal grants authority to an agent through the agents contract
Apparent authority
Aka perceived authority. 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.
Principal
An agent represents the principal, acting on the entity's behalf in contractual agreements with third parties
Which of the following types of agent authority is also called "perceived authority"
Apparent authority
A producer who fails to separate premium monies from his own personal funds is guilty of
Commingling
When an insured makes truthful statements on the application for insurance and pays the required premium, it is know as
Consideration
Mutual insurer
Has no stock, is owned by policy holders. Since they may receive a divident(not guranteed), such policies are known as participating policies. Dividendsreceived by policy holders of a mutual insurer are not taxable.
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.
On a participating insurance policy issued by a mutual insurance company, dividends paid to policy holders are
Not taxable since the IRS treats them as a return of a portion of the premium paid
A participating insurance policy may do which of the following?
Pay dividends to the policyowner. A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs. Policy owner is called policy holder as well.
Who receives dividends from mutual insurer?
Policyholders
Term for entity that an agent represents regarding contractual agreements with third parties?
Principal
Pertaining to insurance, which is example of a producer's fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
Fiduciary
Refers to a position of trust. When an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity.
Which of the following insurers are owned by stockholders?
Stock -only stock insurance companies are owned and controlled by stockholders
Utmost good faith
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as
Reciprocal insurer
When insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.
Policy owners
With participating policies, policy owners are entitled to dividends which in the case of mutual companies are nontaxable because they are considered a return of excess premiums.
