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62 Cards in this Set
- Front
- Back
- 3rd side (hint)
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which of the following situations would create insurable interest
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ALL
1)a lender in the life of a borrower. 2) an individual in his or her own life 3)a student on the life of the person providing their financial support. |
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The purchase of an insurance policy by a consumer is the process of risk:
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Transfer
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All of the following are true of insurance:
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1)It involves a sharing of loss
2)it protects against uncertainty 3) it reduces anxiety NOT it eliminates risk |
Anxiety, uncertainty, Share
AUS |
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what is the definition of Insurable Interest?
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1)someone facing a personal risk of loss
2)An entity having a lawful and substantial economic interest in the safety or perservation of the subject of insurance |
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An example of morale hazard in relation to a life insurance application would be:
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an individual has an indifferent attitude about participating in activities that may be damaging to his health
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The industry's application of the "law of large numbers" is beneficial to insured because it enables the insurers to increase the accuracy of their predictions for the loss experiance of an individual insured.
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False. why? Predictions cannot be made on individuals only groups.
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The professional liability insurance that an agent could purchase is known as Errors and Omissions coverage. Which of the following statments concerning this type of insurance is correct?
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it would cover an agent who created a financial loss by forgetting to renew a policy- a neglignet act
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There are four core component that are required in all contracts, what are they
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1)Valid Legal Purpose
2)Agreement 2)Consideration 4)Competent parties |
VACC
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The phrase "utmost good faith" means what?
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both the insured and the insurer are relying upon the fairness and honesty of the representations being received from each other
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The concept of "adhesion" refers to:
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A court making a decision in favor of an insured because there was unclear wording in the policy document.
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"fiduciary Responsibility" as it pertains to an insurance agent, i sbest defined as what?
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prompt and timely forwarding of premium payments from the insured to the home office
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The company in which the policyholders receive dividennds when there is a profit is a:
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Mutual company
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You mutally partake in the profits of the company
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The purpose of an inurance company's underwriting department is to:
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Classify and select risks
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Classy risks
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What authority do agents have:
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Express
Apparent Actual Implied |
Express apparently was actually impaled
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In establishing the rates to charge premium payers on life insurance, a company will use:
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Mortality
Interest Expenses |
MIE as in Me
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What 2 things can life insurance do?
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create an immediate estate
Premiums can be paid monthly or annually |
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Policy dividends will be larger for a participating policy as compared to a ....
Policy dividends are considered a return on... |
Non-par policy
excess premiums paid |
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What does the medical Information Bureau do?
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They help insurers make decisions whether to insure or not to
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Insurers will not charge more than 25% of the annual premium if the current premium is now being paid...
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Quarterly
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What is a conditional recipt?
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a type of receipt stating coverage begins on a date of application, should the insurer declare teh applicant is insurable according to the company's guidelines
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What describes a term insurance policy?
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a death benefit is payable but there is no cash value
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if a term policy contains a "convertible" clause in it allows teh policyholder to what...
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convert to a permanent insurance from temporary insurance without evidence of insurability
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what does a Permanent insurance contract do?
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it combines innsurance protection with cash accumulation
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PERMA- Protection and Accumulation
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What 2 things will Whole Life policy do?
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it will pay the face amount when the insured reaches 100 and combines teh nonforfeiture values with protection
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Combines nonforfeiture with protection
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How are limited payment whole life policies different from ordinary whole life policies?
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Limited paymetn policies will have a shortend premium period
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What is a endowment policy
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The type of life insurance policy which will pay the face amount to the benificiary if the insured dies during the policy term, or will pay the face amount to the insured who is living at the end of this period
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What can be associated with adjustments made to universal life insurance cash values
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Interest is credited and termed "current"
Premium is charged |
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What 3 things are true about Universal Life Insurance?
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it is transparent and unbundled (policyowner can identify how premium funds are allocated
Neither teh death benefit nor premium level is fixed Theere is a tremendous amount of flexibility available to the policy holder |
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When using a guaranteed insurability rider on a contract, an agent can state that the policy owner is allowed to purchase more insurance...
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On their own life
On certain dates or ages Without insurability requirments |
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What does the Incontestable Clause mean?
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The insurer cannot void a policy because of concealment, fraud or misrepresentation by the insured AFTER a stated period
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CFM
Concealment Fraud Misrepresentation |
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An assignment that transfers all "incidents of ownership" to another party is what
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absolute assignment
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ALL incidents...Absolute
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A policy names an irrevocable beneficiary. this beneficiary type has a...
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Vested interest in the life contract
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Equally sharing the death benift among children can be done most effectively by
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A class beneficiary designation
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The survivorship clause is concerned with the question of medically determining if the insured or primary beneficiary died first
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True. Why..it is meant to protect the contingent beneficiares so it assumes the insured dies first
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What are examples of Policy Exclusions?
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Suicide, aviation and War
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SAW
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the settlement option stating that the principal will only decrease if the beneficiary make withdrawls from it is...
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interest only option
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What is a common non-forfeiture option..
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Cash surrender value
Extended term insurance paid up insurance |
CEP
Cash extends your paid |
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How can a policyholders's dividend be recieved?
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paid in cash
draw interest reduce premiums |
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What describes an annuity
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it has an obligation that is different to teh insurance company for both teh accumulation period and the liquidation period.
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A variable annuity is considered a good hedge agaist inflation since teh investmetn within it is normally?
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in a separate account of common stock
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Are all entitiled employees covered in a non contribtory health policy?
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Yes
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A probationary period is best described as a
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Form of waiting period to receive benifits
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What do you have to know about social security: f
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Benefits are institued by federal law, not contract.
It will likely need to be supplemented by the individual participant since it was designed only to provide minimum floor income it is a compulsory system |
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does fully insured mean the benificiaries will recieve monthly benifits for life?
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NO
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What are the 4 types of benifits the social security system gives, what are they
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Disability
Medicare survivors retirement |
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what is Reinsurance?
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The process whereby an insurer has an agreement with other insureres to share amounts of insurance over established retention limits
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where are alien insurers located?
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Outside the US
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Where does most of teh regulation take place relative to teh insurance industry
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State level
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if an insurer is deemed an admitted company in CA they..
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are approved to sell insurance products in the state
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When can a person who is a life only agent be licensed as a life solicitor?
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never, life solicitor licenses do not exist.
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Of a life analyst to charge a fee, what items must be seen in an agreement?
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Exact fee
commission received for the sale of products The information being analyzed can be obtained directly from the insurer at no charge |
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When can an application for a life only agent be denied without a hearing?
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if an application for a license been denied previously within 5 year for a cause
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On which date does the authority given to a licensee from an insurer to transact insurance become effective?
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The date teh insurer signs the notice of appointment
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The DOI has nothing to do with this date
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When does the license of a life only agent become inactive?
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When teh agent is not currently appointed by an insurer, but renewal fees are paid and continuing eductation requirments have been meet
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What is insolvancy when it relates to insurance?
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The inablility of an insurer to meet financial obligations to policy owners as a result of a deficient amount of paid-in capital
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Meaning it doens't have money to function
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What is concealment?
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Failure to disclose to another party that which should be known in order to make a proper decision
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In the Insurance Code the definition of "transacting insurance" means..
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soliciting a contract of insurance
Negotiating with the client before the sale is made executing and then servicing a contract of insurance |
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How is materiality best defined?
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it is based on the influence of the facts on the parties in forming an opinion as t teh disadvantages of the considered policy
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Any attempt to induce a policyholder to lapse, forfeit or surrender an existing policy thru the use of misleading representation is called
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Twisting
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The the terms of a policy are misrepresented by a producer,that is producer has commited a
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misdomeanor
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What amount can be imposed as a fee if a commissioner determines that an agent violates an order of the court
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55K
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The unfair claims practices Act says that any attempt to settle a claim by an insured for less than a resonable person believes they were entitled to according to a written or printed advertising document is what?
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Unfair
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