Flash cards/ set 1

Alien

What type of insurer is formed under the laws of another country?

When it is intentional and material

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

Adverse Selection

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

Pure Risk

What type of risk is insurable?

The Agent’s

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

The agent or the producer

According to the Law of Agency, a principal is represented by whom?

Morale

A person who does not lock the doors to their house shows an indifferent attitude. This person presents what type of hazard?

foreign

An insurance company that is formed under the laws of another state is known as what type of insurer?

implied, express, apparent

An insurance company that is formed under the laws of another state is known as what type of insurer?

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?

Mutal Company

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

Physical, moral and morale

What are the three types of hazards?

Domestic, foreign, and alien

Insurers are classified according to their domicile. What are the three types of insurers?

Moral

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

When the insurer approves a prepaid application.

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

Return the application to the applicant for completion

What is the best way to handle incomplete insurance applications?

Stock company

The insurer organized to return a profit to the stockholders is what type of insurer?

Insurer

When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

Peril

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

The Agent

Who is responsible for making sure that an applicant receives the new insurance policy once it's issued?

Authorized or Admitted

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?

Answer

Stock Holders

Who owns stock companies?

Hazards

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

When the policy is delivered and the premium is paid

When does an insurance policy go into effect?

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?

Foreign

An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer's classification in Nevada?

Pure

A situation in which a person can only experience a loss and no gain presents what type of risk?

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

What are the four elements of an insurance contract?

Certificate of Authority

What document is required for an insurance company to transact insurance?

Loss

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

Speculative

Wagering on a sporting event is known as what type of risk?

Mutual

An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

Insurable interest and consent

What two elements are necessary for a life insurance contract to have a legal purpose?

Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.

What are the five characteristics of an ideally insurable risk?

An absolutely true statement upon which the validity of the insurance contract is based

What is a warranty in an insurance contract?

When the insurance application is submitted

In insurance, when is the offer usually made on a contract?

Send the application back to the applicant for signature

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

Insurance company

Whom does an insurance agent represent?

uncertainty of Loss

For the purpose of insurance, what is risk?

Insurer

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

Insurance company

What entities make up the Medical Information Bureau?

Loss

Insurance is a contract that protects the insured from what?

Insurance

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

Fiduciary

The requirement that agents must account for and promptly remit all insurance funds collected is knows as what type of agent responsibility?

Fiduciary

The requirement that agents must account for and promptly remit all insurance funds collected is knows as what type of agent responsibility?