NC Health Insurance Exam Pearson Vue

Pure Risk

chance of loss or no loss but not gain insurable

Speculative Risk

there is possibility of loss but of gain no insurablility

exposure unit

subject to loss

peril

cause of loss

life insurance

death

Health insurance

accident and sickness

hazard

increases the likelihood or severity of loss

Three types of hazard

physical, moral, morale

physical hazard

arise from the inherent characteristic of the exposure unit

Moral Hazard

lifestyle of the insured person

Morale hazard

arise more from an outlook on life

risk avoidance

eliminating all risk altogether

risk retention

manage risk Deduction

self-insurance

instead of buying health insurance and saving $ in the bank

Pure risk that are not insurable

Flood, War, Catastrophic losses

Intentional losses

not insurable

Adverse selection

bad for insurance

insurance actuary

a specially trained mathematician who calculates premiums

underwriter

checks out the medical history of the proposed insured and other factors to eliminate adverse selection against the insurance company, issue policy premium restrictions

Days for applicant to requests an explanantion

90 days

Days insurance company must furnish an explanation

21 days

A dispute must begin within in

30 days

Law of Large numbers

the larger the number the easier it is to predict losses

how much $ must a insurance company have in reserve at all times

4 million

Reinsurance agreements

enable an insurance company the ceding company to transfer risk to the reinsurer (seller)

Capital Stock companies are owned by

stock holders and most common

Main purpose of the stock company

make a profit for its investors

Mutual companies are owned by

policy holders

Assessment insurers

charge additional premiums at the end of the specified time period

Fraternal benefit societies are similar to

mutual companies

who is only eligible to buy insurance policies from a Fraternal?

its members

Fraternal agents can only sell which policies

life, health and annuity policies

self insurers

only insure themselves

Reciprocal exchanges

all its members to to insure each other

who manages a reciprocal?

attorney-in-fact

who often steps in to cover risks too large or too catastrophic for private insurers?

government insurers

Social Security

a federal program funded by employers, employees and the selfemployed

What agency does not fund social security?

FEderal Government

Insurers must be in a state to sell insurance

Authorized

What does Insurer get to sell in the insurance in a certain state?

Certificate of Authority

What are insurers classified as in their own state?

Domestic

What are insurers classified as in another state?

Foreign

What are insurers classified as in another country?

Alien

What is a legal contract?

Insurance policy

What is the role of the agent?

bring contract parties together

An agent is not a __________ to the contract

party

An agent is an___________ to the contract

intermediary

Contract parties are known as

principals

what are the only two principals in an insurance contract

insurer and owner

What are two ways agents are classified?

captive or independent

how many companies does a captive agent represent?

One and all his commissions and renewals are usually retained by the insurer

how many companies does a independent agent represent?

one or more and does not loose his commissions or renewals

What does a general agent do?

hire, train and supervise agents of a company within a specified area

What are three categories of agent authority?

Express,implied, and apparent

who represents the buyer of insurance?

brokers

who does an agent represent?

Insurance company

express authority

authority given the agent thru oral or written contracts

Implied authority

can be done

apparent authority

the company has put the agent in a position of authority

Fiduciary

expected to act with utmost good faith for the benefit for all contract parties

what is a legal contract enforceable in a court of law

insurance policy

what are the four elements of legal contract

offer and acceptance-agreement

is a oral contract legal?

if it has witnesses

what is not one element of a legal contract

signature

what are the four elements of a legal contract

consideration- values exchanged

what are the four elements of a legal contract

competent parties

what is not considered a competent parties

underage, legally incompetent and intoxicated

both parties must reach a __________

agreement

a legal contract must have

something offered and the unconditional acceptance

what are the four elements of a legal contract

legal purpose insurable interest

Values exchanged represent

$$$$

what two things does the offer of the application consist of

application and premium

there is no contract until....

the premium is paid

what age in NC is one considered an adult?

18

at what age can one purchase a life insurance policy?

15

what age can one purchase a insurance policy on someone else?

18

can there be a 3rd party beneficiary on own policy

yes

what must one have to buy insurance?

legal purpose insurable interest

Adhesion

take it or leave it policy is accepted by the applicant AS IS

Aleatory contract

unequal insurance policy

insurance policy is also a

personal contract

Unilateral

only one side makes the enforceable promise

Conditional contract

policyowner must furnish proper proof of loss to get a claim paid and the insureer must give proper notice of nonrenewal

how many days does an applicant have to think about the contract

10 days

indemnify

to restore to the condition enjoyed before the loss no more and no less

one way the insurance policy indemnifys the policyowner

Valued Contract pays a fixed amount (life insurance and disability income)

one way the insurance policy indemnifys the policyowner

pays actual expense (medical)

always answer questions about the _____ or ______ but not the __________

past, present, future

a voided policy means

never really happened usually as a result of misrepresentation such as telling a lie or partial truth

conccealment

applicant withheld material information from the insurer

void contrace

fraud

concealment or misrepresentation is intended to hurt someone else

how many days does the insurer have to notify of discontinue a group plan

45

Warranty

rarely used in insurance makes promises that extend into the future and results in a voided contract

waiver and estoppel

insurer waives a clear contract provision they can not reassert it later

incontestability period

amount of time

number of years that the insurer must discover misrepresentation health only

2 years

in health insurance fraud can be contested when

at any time within the futre

3 factors in determining insurance premiums

mortality, interest expenses

net single premium

mortality minu interest

gross premium

mortatlity minus interest plus expenses