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Reinsurance

An ___ insurer assumes risk from another insurance company.

Agent's contract and the insurance company's appointment.

An agent's authority to bind an insurer to an insurance contract may be granted in the ___

Participating insurance policy

Policy owners may be entitled to receive dividends. (From the company's divisible surplus)

Captive Insurer

Type of insurer that limits the exposures it writes to those of its owners.

Protect against medical care costs and the loss of earning power

The main role of accident and health and disability insurance is to ___

Risk Retention Group

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as ____

Captive Agent

An insurance agent who represents only ONE insurance company

The Shareholders

Dividends from a stock insurance company are normally sent to ___

Life Insurance

Financial product that creates an instant estate, no matter the date of death

Paid to the policyowners

In a mutual company, dividends are ____

As the number of insureds increase, the number of losses decrease

Insurance is NOT characterized as ___

Facultative Reinsurance

The process when a ceding insurer transfers a portion of its risk to an assuming insurer on a case by case basis

Policyholders

Dividends from a mutual insurance company are paid to whom?

Upon completion of the application

At what point must a a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?

Reserves:

Accounting measurement of an insurer's future obligations to its policyholders.

Attorney-in-fact

An administrator to a reciprocal insurer, who manages the premiums collected from the group's members.

Independent Agent

An agent who may represent several insurers.

Reciprocal Association

An unincorporated association whose members provide coverage for one another

Regulate state insurance commissioners

Is NOT an objective of the National Association of Insurance Commissioners?

Shareholders

A stock insurance company is owned by its ___

Divisible surplus

Mutual insurers pay dividends to participating policyowners if the insurer has ___

Telemarketers

The Do Not Call Registry is designed to protect against ___

Producer Contract

Outlines the authority given to the producer on behalf of the insurer

Treaty Reinsurance

Reinsurance contract between two insurers involves an automatic sharing of risks assumed

State Insurance Departments

Who regulates an insurer's claim settlement practices?

A claim will be paid if an admitted insurer becomes insolvent

The State Guaranty Association guarantees___

Reserves

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

Llyod's Organization

A syndicate established by a group of insurers to share underwriting duties

Fair Credit Reporting Act

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the:

Treaty

What type of reinsurance contract automatically shares percentages of the insurer's business (and risk exposure) with each party?

Reinsurance Contract

A contractual agreement that transfers a portion of risk exposure to another insurer.

Risk transfer

A business becoming incorporated is an example of____

Speculative

Type of risk that involves the potential for loss AND the possibility for gain.

Individual losses can be predicted based on past experience

Not a characteristic of the Law of large Numbers:

Risk Transfers

Involves sharing an uncertain risk with another similar group

Risk

"The potential for loss"

As the number of insured units increases, the number of losses decreases

FALSE statement regarding insurance:

Hold-harmless Clause

Example of risk transfer- clause in contract that shifts liability from one party to another

Predictability of losses will be improved

According to the Law of Large Numbers, how would losses be affected if the number of similar insured units increase?

That the chance of loss be calculable

An insurable risk requires ___

Homogeneous exposure parts

Similar objects which are exposed to the same group of perils

Peril

"The cause of a loss"

Not doing a business deal after deciding it would be too risky

NOT an example of risk retention:

Pure

Type of risk that is insurable.

Speculative Risk

Not considered to be an element of an insurable risk

Reinsuring risks

How can an insurance company minimize exposure to loss?

Risk Management

The process of analyzing exposures that create risk and designing programs to handle them

Pure Risk

Type of risk that involves the potential for loss with no possibility for gain.

Risk Transfer :

The act of insuring a risk against possible loss.

Risk reduction

Minimizing the severity of a potential loss

Until Age 65

How long does protection normally extend to under a limited pay whole life policy?

Underwriting Information

Life insurance agents are involved first- hand in the underwriting process, and are often the source of ____

Underwriting

The process in which an insurance company determines whether or not a particular applicant is insurable, and what premiums to charge

Underwriting Information Used

Applicant's health (both current and past), occupation, lifestyle, hobbies, and habits.

The insurance application

One of the main sources of underwriting Information for the company

1.General Information

2.Medical Information

3.The Agent's Report

The basic components of all insurance applications

General questions about the applicant: Name, age address, birth date, gender, income, marital status, and occupation

General Information application section

Information on the applicant's medical background, present health, recent medical visits, the medical status of living relatives, and the causes of deaths of relatives.

Medical Information application section

As a field underwriter, the agent can be considered the most important source of information available to the company underwriters.

Agent Report application section

Entire contract

Though the agent report is a part of the application process, it does not become part of the ____

Medical Information Bureau report

In addition to an attending physician's report, the underwriter will usually request a ____

Medical Information Bureau (MIB)

a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical information on individuals

Consumer Reports

Reports including written and oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency (from employment records, credit reports, and other public sources)

Investigative Consumer Reports

Reports including written and oral information regarding a consumer's credit, character, reputation, or habits obtained through an investigation and interviews with associates, friends and neighbors

Has the right to know what was in the report, and will be provided with the name and address of the reporting agency

Under the Fair Credit Reporting Act, if someone applying for insurance is declined or modified because of information contained in either an consumer or investigative report, the person _____

Standard, substandard, and preferred

An individual can be rated as one of the three risk classifications:

Standard Risk Classifications

Persons who, according to a company's underwriting standards, are entitled to insurance protection without extra rating or special restrictions.

Substandard Risk Classifications

People who are not acceptable at standard rates because of a physical condition, personal or family history with disease, occupation, or dangerous habits.

Rated Policies

Substandard risk policies are also referred to as ____ because they could be rated up, resulting in a higher premium.

Preferred Risk Classifications

People who meet certain requirements to be considered in superior physical condition, with healthy lifestyles and habits. They qualify for lower premiums than standard risk.

Conditional Receipt

An interim insuring agreement under which the insurance company agrees to start coverage on the later of either the date of application, providing that the insurance company approves them for insurance.

Will proceed as though the applicant were still alive.

If an agent collects the initial premium from an applicant and gives the applicant a conditional receipt, and the applicant dies the next day; The underwriting process ____

Will be refunded to the beneficiary, and the insurer is not required to pay he death benefit

If an agent collects the initial premium from an applicant and gives the applicant a conditional receipt, and the applicant dies the next day; However, the applicant is determined by the insurer to not be an acceptable risk and declines the coverage, the premium _____

Will receive the death benefit of the policy.

If an agent collects the initial premium from an applicant and gives the applicant a conditional receipt, and the applicant dies the next day; And if the coverage is approved, then the applicant's beneficiary ______

Backdating

Sometimes is is possible to lower the premium rate by _______ an application for insurance

6 months

If the applicant chooses to backdate, the policy can be backdated for no longer than _____

Lower the premium

The only reason that an application may be backdated is to ______

They are individually uninsurable according to the insurer, or they refuse coverage in writing

If the employer pays all premiums for a group life policy, all employees must be included in the plan, unless _______

Annually, renewable term insurance

Group life insurance is also usually written as ____

Enrolls during the open enrollment period

In group insurance evidence of insurability is usually not required if participant _____

Policy; instead they receive certificates indicating that they are included in the coverage.

Participants under a group insurance plan do not receive or control a _______

Non-contributory Plan

When an employer pays all of the premiums, the plan is referred to as a ______

Contributory Plan

When the premiums for the group are shared between the employer and employees, the plan is referred to as a _______

Selects the type of insurance coverage, which maybe be permanent or term insurance

In most cases with group insurance, the employee's company who is the master policyholder, ______

conversion provision that allows individual insured members to convert to an individual plan without evidence of insurability.

Group life policies must contain a _____

Whole life policy, as opposed to a term policy

Most group conversion provisions required that the conversion be made a _______

Persons to be insured under a group plan.

In a group plan, insurance companies may establish a minimum number of ________

They are enrolling for coverage outside of the normal enrollment period.

Evidence of insurability is usually not required of each participant in a group plan unless ______

the various group characteristics

The underwriting of group insurance is based on ________

The average age of the group and ratio of men to women

The cost of coverage in group insurance plans is based on ______

Tax deductible

With group insurance, the premium that an employer pays for the life insurance on their employees are _____

For such insurance are not tax deductible

Any time a business is the named beneficiary of a life insurance, or has a beneficial interest in the policy, any premiums that the business pays _______

Key Employee Insurance, Stock Redemption or Entity Purchase Agreement, Split Dollar Insurance

When a business pays the premiums for the following arrangements: _________; the premiums are not deductible

Group Credit Life

A type of decreasing term insurance issued to creditors to cover the lives of people who have outstanding loans

Blanket Life Insurance

Group insurance that covers groups of people exposed to a common hazard.

Franchise Life Insurance

Group insurance used when participants are employees of a common employer or are members of a common association or society

Passengers of an airline or students of a school

Examples of persons under Franchise Life group insurance

Furnished with certificates of insurance

With Group Credit Life, Blanket Life Insurance, and Franchise Life Insurance, no persons under the policy is named on the policy or ______

The specific hazards stated in the policy

With other forms of group insurance (such as Group Credit Life, Blanket Life Insurance, and Franchise Life Insurance) they are covered only for ______

Annuity

Provides income for a specific number of years or for life