GENERAL INSURANCE

what is insurance?

transfers risk of loss from an individual or entity to an insurance company, which in turn spreads the cost of unexpected losses to many individuals

what is risk?

the uncertantiy or chance of a loss occurring

what is a peril?

causes of loss insured against in an insurance policy

what are the elements of insurable risk?

1) due to chance 2) definite and measurable 3) statistically predictable 4) not catastrophic 5) with large loss exposure 6) insurance cannot be mandatory

what are some common personal uses of life insurance?

survivor protection, estate creation and conservation, cash accumulation, and liquidity

what is the difference between an insurer that is authorized and one that is unauthorized?

authorized insurer is qualified and received a Certificate of Authority from DOI to transact insurance in the state. nonauthorized insurer is an insurance company that has not applied for, or has been denied a Certificate of Authority and may not transact insurance.

what is the difference between domestic, forgein, and alien insurance companies?

domestic insurer is incorporated in this state. foreign insurer is incorporated in another state. alien insurer is incorporated outside the united states

in a life insurance policy, when must the insurable interest exist?

between the policyowner and the insured at the time of application(OR TIME OF POLICY ISSUE), but not at the time of loss

what are the four elements of an insurance contract?

agreement- offer and acceptance, consideration(payment), competent parties, and legal purpose

what does indemify mean?

to “restore” an insured to the same financial status as before the loss

what does representation mean and how does it differ from a warranty?

representations are statements believed to be true to the best of ones knowledge. a warranty is an absolute true statement upon which the validity of the insurance policy depends

what are the three types of agent authority?

express, apparent, implied

what is underwriting?

risk selection and classification process

what information is gathered in parts 1 & 2 of the application?

1) general info (name, age, address, birth date, income, marital status, occupation) 2) medical information about prospective insured

what is the purpose of the agent’s report?

agents (producers) report is used to discuss the agent’s personal observations concerning the proposed insured

who is required to sign an application for life insurance?

both the agent and the proposed insured (usually the applicant)

when does an insurance policy go in effect?

the policy will go into effect when the first premium is paid, and the policy has been delivered

what is the purpose of the Fair Credit Reporting Act?

the act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. it also protects consumers against the circulation of inaccurate or obsolete information

what is the difference between a consumer report and an investigative consumer report?

investigative consumer reports are similar in that they also provide information on the consumer’s character, reputation, and habits. the primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer

how does substandard risk policy differ from a standard risk policy?

substandard risk applicants are not acceptable at standard rates because pf physical condition, personal or family history of disease, occupation, or dangerous habits. these policies could be issued with the premium rated-up

what are the 3 factors that determine the premium for a particular policy?

mortality, interest earnings, and expense

when would an insured be required to sign a statement of good health?

if the initial premium is not paid with the application, the agent may need to obtain the statement of good health at policy delivery

what information does a Buyer’s Guide provide?

basic information about life insurance policies and comparision of policy cost

what is the needs approach to determining amounts of life insurance based upon?

the needs approach is based on the predicted needs of a family after the premature death of the insured