Insurance basics
what are the 4 elements of an insurance contract
1) agreement 2) consideration 3) competent parties 4) legal propose
What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the policy is based
who is considered a nonresident agent
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
if an insurer meets the states financial requirements and is approved to transact business in the state it is considered
Authorized or admitted
What document is required for an insurance company to transact insurance?
Certificate of authority
What are the three types of insurers
Domicile, Foreign, and alien
the requirements that agents must account for and promptly remit all insurance funds collected is known as what type of responcibility
Fiduciary
what are conditions that increase the chance of loss
Hazards
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable intrest and consent
if the applicant conceals relevant health info, the applicant presents what type of hazard
Moral
what are the three types of hazards
Physical, Moral, and Morale
Who can usually be granted a temporary license?
Producer's spouse or designee in case the licensed producer dies or becomes disabled
a risk where there is a chance of loss and no gain
Pure risk
to whom may a certificate of authority be issued
To an insurer authorized to transact business in this state
what is the purpose of a cease and desist order
To prevent a producer or insurer from further violating laws for transacting insurance
what are the most common penalties for violations of insurance status
a cease and desist order, a fine, and licensing suspension or revocation
who is an insurgence agent
a person authorized to sell solicit and negotiate insurance contracts
What type of licensee represents the insured
broker
If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?
defamation
what do people use to transfer the risk of loss
insurance
someone who dose not lock their doors presets what type of hazard
morale
who can make a change on an application
only the applicant can make a change and they must initial it.
who must be notified of a producers change of address
the department of insurance
what are producers required to do in order to renew their license
complete continuing education hours and pay a renewal fee
Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?
discrimination
in general who can be excluded from producer licensing and examination requirements
insurance company officers directors or any other employees who do not transact insurance and who do not receive commission for their services
Insurance is a contract that protects the insured from what?
loss
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
misrepresentation
on its advertisement a company claims that it has funds in its possession that are in fact not available for the payment of losses or claims what is the company guilty of
misrepresentation
an insurance policy pid a non taxable dividend to the insured one year but not the next. what type of insurer issued the policy
mutual (participating)
who may share in the commission for the sale of a life insurance policy
only producers properly licensed for the type of insurance transaction
what is the term for the causes of loss insured against in an policy
perils
what strategies are used by the underwriters to prevent adverse selection
restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate..
if the commission/ superintendent finds a licensee engaging in an unfair method of compensation or an unfair practice what order will be issued
cease and desist order
what type of insurer is formed in another country
alien
if something is missing from the application what must the agent do
go back to the applicant and have them finish the application.
what are the 5 characteristics of an Ideally Insurable risk
los must be- 1) due to chance 2) definite and mesurable 3) statistically predictable 4) non catastrophic 5) coverage cannot be mandatory
who dose the insurance gent represent?
the insurance company the insurer
who is responsible for the cost associated with the examination of insurers
the insurer who is being examined
What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
twisting
when would a misrepresentation on an application be considered fraud
when it is intentional and material
in insurance when is the offer usually made on a contract
when the insurance application is submitted
in forming an insurance contract when dose the acceptance usually occur?
when the insurer approves a prepaid application?
when dose an insurance policy go into effect
when the policy is delivered and the premium is paid
When can the Commissioner or Director examine insurers?
whenever deemed necessary but at least once every few years
for what reason can a temporary license be issued
For continuation of business in case the licensed producer dies or becomes disabled
when risks with higher probability of loss are seeking insurance more often than other risks this is know as
adverse selection
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
is an insurer holds a certificate of authority it is known as what type of insurer
authorized or admitted
Wagering on a sporting event is an example of what type of risk?
speculative
the insurer organized to return a profit to stock holders what type of insurance?
stock company
who owns stock companies
stockholders
According to the Law of Agency, who represents the principal?
the Agent or producer
What type of licensee represents the insurance company?
the agent
if an applicant dose not receive his or her policy who is held responsible
the agent
When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
insurer
in the agent/ insurer relationship who is considered the principle
insurer
what entity make up the Medical Info bureau
insurers
What kind of risk is insurable?
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
who is responsible for making sure an application is completely filled out
the agent
what is risk in insurance
the uncertainty of loss
