Primerica

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

Consideration -it 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 representation made in the application.

An insurance policy that requires you only pay premiums for a specified number of years until the policy is paid up.

Limited-pay life

Who might receive dividends from a mutual insurer?

Policyholders -A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend(not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable.

Risk-sharing arrangement

Reciprocal

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

When an insurer's underwritten approves coverage

Marketing arrangements used

-Independent agency system -direct response marketing system -general agency system

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 -to fund losses that cannot be insured.

Adverse selection

A concept that describes risks with higher probability of loss seeking insurance more often than other risks. -Adverse selection means that there are more risks with higher probability of loss seeking to purchase and maintain insurance than the risks who present lower probability. Underwriters must guard against this.

If an insurer meets the states financial requirements and is approved to transact business in the state, it is considered to be

Authorized

The insurer may suspect that a moral hazard exists if the policyholder

is not honest about his health on an application for insurance.

The act of withholding material information that would be crucial to an underwriting decision

Concealment

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

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

Fiduciary responsibility means

Handling insurer funds in a trust capacity