Primerica study guide part 1

Certificate of Authority

A state-issued document empowering an insurance company to become an admitted insurer is called what?

Agent or Producer

According to the law of agency, a principal is represented by whom?

Moral

An applicant conceals relevant health information on the application. The applicant presents what kind of hazard?

Hazards

Conditions that increase the chance of loss are known as what?

Uncertainty of Loss

For the purpose of insurance, what is risk?

Send the application back to the applicant for signature

If an agent fails to obtain the applicants signature on the insurance application, what must the insurer do?

The Agent

If an applicant does not receive his or her insurance policy, who would be held responsible?

Insurer

In the agent/insurer relationship, who is considered the principal?

Financial Responsibility of Loss

Insurance is used to transfer what to the insurance company?

Loss

The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?

Mutua Company

The type of insurance company organized to return any surplus money to its policyholders is known as what?

Agreement (offer and acceptance); Consideration; Competent Parties; and Legal Purpose

What are the four elements of an insurance contract?

Restriction of coverage; refusal to accept a risk; and accepting a risk at a higher rate.

What are the strategies used by underwriters to prevent adverse selection?

Express, Implied, Apparent

What are the three types of agent authority?

Insurance

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

Underwriting

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Peril

What is the term for causes of loss insured against in an insurance policy?

Fraternal Insurer

What type of insurer is a voluntarily formed organization that provides insurance benefits for members of an affiliated lodge or religious organization with a representative form of government?

Pure

What type of risk is insurable?

Complete a new application or ask the applicant to initial the correction on the original application

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

When the policy is delivered and the premium is paid

When does an insurance policy go into affect?

Adverse Selection

When risks with higher probability of loss are seeking insurance more often than other risk, this is known as what?

When it's intentional or material

When would a misrepresentation on an insurance application be considered fraud?

Stockholders

Who owns stock companies?

The Agents

Whose responsibility is it to determine that all the questions on an insurance application are answered?