Life insurance chapter 1

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in insurance an offer is usually made when

an applicant submits an application to the insurer

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

apparent or perceived

a producer who fails to separate premium monies from his own personal funds is guilty of

commingling

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

concealment

an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. the insurer violated what insurance principle.

consideration

binding force in any contract is

consideration

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

consideration

the application given to a prospective insured is not in what part in a policy

consideration

The authority granted to an agent through the agent's contract is referred to as

express

written into the contract between the insurer and the agent

express powers (express authority)

refers to a position of trust. when an agent is handling the premiums that belongs to an insurance company they are acting in a what capacity

fiduciary

the requirement that agents not commingle insurance monies with their own funds is known as

fiduciary

an insurance company is domiciled in Montana and transacts insurance in WY. which term best describes the insurers classification in WY

foreign

speculative risk

gambling is an example

give rise to a peril

hazards

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

implied

the loss must be catastrophic is not a characteristic of an

insurable risk

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

insurance

based on the principle of indemnity

insurance

based on the spreading of risk (risk pooling) and the law of large numbers

insurance

transfers the risk of loss from and individual to an insurer

insurance

basis for a claim against an insurance policy

loss

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

loss

the reduction decrease or disappearance of value of the person or property insured in a policy by a peril insured against is know as

loss

which of the following is the basis for a claim against an insurance policy

loss

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

material misrepresentation

a tendency toward increased risk

moral hazard

an individual's tendency to be dishonest would be indicative of a

moral hazard

a person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard

morale

an indifference to loss

morale hazard

indifferent to loss, shows carelessness

morale hazard

an insured purchase an insurance policy 5 years ago. last year she received a dividend check from the insurance company that was not taxable. This year she did not receive a check from the insurer. what type of insurer did the insured purchase the policy

mutual

on a participating insurance policy issued by a mutual insurance company dividends paid to policyholders are

not taxable since the IRS treats them as a return of a portion of the premium paid

pay dividends to owner based upon actual mortality cost interest earned and costs

participating insurance policy

a tornado that destroys property is an example of

peril

cause of loss insured against in an insurance policy

peril

physical condition is a

physical hazard

what is not an example of risk retention

premiums

grants authority to an agent through the agents contract

principal

pertaining to insurance, what is an example of a producers fiduciary responsibility

promptly forwarding premiums to the insurance company

the risk of loss may be classified as

pure and speculative risk

insurable because it involves a chance of loss only

pure risk

to be characterized as what risk the loss must be due to chance, definite, measurable and predictable but not catastrophic

pure risk (insurable risk)

insurance is the transfer of

risk

uncertainty regarding a financial loss

risk

steps taken to prevent losses from occurring

risk reduction

Planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.

risk retention

dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group

sharing

a participating insurance policy may do what

Pay dividends to the policyowner

Who might receive dividends from a mutual insurer?

Policyholders

takes place when an insurers underwriter approves the application and issues a policy

acceptance

which documentation grants express authority to an agent

agents contract with the principal

domiciled in one country and transacts insurance in another

alien

A promise to pay in the event of a loss

Consideration on the part of the insurer

not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization

Fraternal benefit society

not insurable because it involves a chance of gain

speculative risk

insurance company owned and controlled by stockholders

stock

in terms of parties to a contract which of the following does not describe a competent party

the person must have at least completed secondary education

when an individual purchases what risk management he/she practicing

transfer


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