Xcel BASIC PRINCIPLES OF LIFE AND HEALTH INSURANCE

Insurance

A legal contract that transfers uncertain risk from one party to another, where the insured pays a premium to the insurer to guard against financial loss.

Indemnify

To restore an insured to the financial position they held before an insured loss.

Stock Companies

Nonparticipating insurance companies owned by stockholders who share in both profits and stock dividends.

Mutual Companies

Participating insurance companies owned by policyholders who receive dividends from the surplus revenue.

Risk Retention Group (RRG)

A specialized insurance company that provides liability insurance for individuals and entities sharing a common bond.

Reinsurer

An insurance company that provides insurance to other insurance companies, assuming risks from them.

Authorized Insurer

An insurer that has been granted a certificate of authority by a state to conduct insurance business.

Non-admitted Insurer

An insurance company prohibited from conducting insurance operations in a specific state.

Producer

An individual or organization licensed to solicit and sell insurance.

Actuarial Department

The department in an insurance company that calculates policy parameters, including risks and costs.

Fraternal Benefit Society

A not-for-profit organization that offers insurance based on a common bond among members.

Reciprocal Insurers

Insurers where each policyholder shares risk with others and may receive dividends from the company surplus.

Career Agency System

A system where major insurers recruit and train new agents through career agencies.

NAIC (National Association of Insurance Commissioners)

An association of state insurance regulators focused on establishing model acts and regulations to address industry-wide issues.

Model Advertising Code

NAIC's guidelines that label certain words and phrases as misleading and ban their use in insurance advertising.

Self-Insurers

Individuals or organizations that establish a self-funded plan to cover potential losses.