Life and Health Insurance Exam Review

Flashcards for Chapter 1 Exam: Basic Principles of Life and Health Insurance

Risk Retention Group

A group-owned insurance company formed to assume and spread the liability risks of its members.

Reserves

The stated amount or percent of liquid assets that an insurer must have on hand to satisfy future obligations to its policyholders.

Fair Credit Reporting Act

A Federal law requiring an individual to be informed if that individual is being investigated by an inspection company; requires insurers to disclose information gathering practices and where the information was obtained.

Treaty Reinsurance

A reinsurance contract where two companies automatically share their risk exposure by accepting specific percentages of the insurer's business.

Fair Credit Reporting Act (Insurers)

Requires insurers to disclose when an applicant's consumer or credit history is being investigated; insurers must inform applicants about any investigations being made. If the report is used to deny coverage or charge higher rates, the insurer must provide the applicant the name of the credit reporting agency conducting the investigation.

Dividends (Payable to Policyowner)

Declared by the insurance company, not guaranteed.

Fair Credit Reporting Act (Life Insurance)

An applicant for life insurance must be informed of their rights upon completion of the application.

Mutual Insurance Company Governing Body

Elected by the policyholders.

Fraternal Benefit Society

A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members.

Participating Policy

An insurance policy that pays out dividends to the policyholders.