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47 Cards in this Set
- Front
- Back
- 3rd side (hint)
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The purpose of buying insurance |
To deal with uncertainties (risks) people face in everyday life |
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Insurance |
The transfer of risk from one party to another |
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Pure Risk |
Involves a chance of loss |
Becoming disabled, hospitalized, accidental death |
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Speculative Risk |
Chance for a loss or a gain |
gambling, lottery tickets, horse racing |
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Peril |
The event that causes a loss. What insurance is insuring against |
Health situations, AD&D |
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Hazard |
The increased chance of loss |
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Physical Hazard |
Dangerous occupation/avocation (hobby) |
Working with hazardous material, explosives, racing cars, poor health |
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Moral Hazard |
Acting dishonestly in the transaction of insurance |
Cheating, fraud |
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Morale Hazard |
Carelessness or being irresponsible. Know it's wrong but do it anyway |
Texting/driving, excessive drinking, not wearing a seatbelt |
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Law Of Large Numbers |
Make it possible to predict losses with some degree of accuracy |
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Morbidity Tables |
Tables used for health insurance |
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Mortality Tables |
Tables used for life insurance |
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Actuaries |
Mathematicians who study and compile statistical data that's used to predict probable losses |
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Indemnity |
Compensation for damages or loss |
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Underwriters |
These people are responsible for protecting the insurance company against adverse selection |
Good risk vs bad risk |
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Adverse Selection |
The tendency of those in dangerous jobs or high risk lifestyles to get life insurance |
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Waiver |
Purpose is to reduce/eliminate coverage for pre-existing conditions for a period of time |
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Principle of Indemnity |
Insurer agrees to restore the insured to their financial condition prior to loss |
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Domestic Insurers |
Home office is located in the state it sells insurance |
ABC Company home office in NYC sells in NY State |
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Foreign Insurers |
Home office is located in another state |
ABC Company home office in Chicago, but can sell in NY State |
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Alien Insurers |
Home office is located in another country |
ABC Company home office in Canada, but can sell in the U.S. |
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Stock Company |
A company owned by stockholders who issue non-participating policies and pay dividends to stockholders |
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Mutual Company |
A company owned by policy owners who issue participating policies and pay dividends to policy owners |
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Lloyds Association |
Sell any kind of insurance |
Katy Perry's Legs, oil tankers, hole in one shot |
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Commonly used rating companies |
AM Best, Standard & Poor, Duff & Phelps, Fitch, Moody's and Weiss |
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Express Authority |
Authority that is written in the contract |
Tells what the agents can and can't do |
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Implied Authority |
Authority not expressed or written into the contract, but the agent is assumed to do |
Collection of premiums |
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Comingling |
Taking money from clients premiums to use for your own expenses |
Taking money from premiums to pay your bills |
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Utmost Good Faith |
Both parties should be telling the truth |
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Aleatory |
Performance depends upon an uncertain event. Uneven/Unequal |
A-lean-atory |
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Adhesion |
The insurer drafts the wording and the insured adheres to it |
Take it or leave it |
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Unilateral |
Only one party (the insurer) of the contract is legally required to do something |
One-Sided |
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Warranty |
Statements that are considered to be guaranteed to be true |
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Representations |
An applicant's statements or response to questions on an application |
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Misrepresentations |
Written or oral statement that is false |
A lie |
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Concealment |
Failure to disclose known facts |
Hiding the truth |
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Consideration |
Both parties exchange something of value |
C=A+P |
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Independent agents |
Represent several companies |
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Exclusive Agent |
Represents one company |
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Agents Fiduciary Responsibility |
Agents responsibility to follow rules |
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Material Misrepresentation |
Had the underwriter known from the beginning, they wouldn't have issued the policy |
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Estoppel |
Can't regain a right you've already given up |
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Underwriter |
Protects insurance company against adverse selection |
Good vs bad risk |
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Offer |
Completed App + Premium |
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Invitation |
Application with no premium |
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Statement of Good Health |
Statement saying your health hasn't changed since the last time you saw the field underwriter |
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Elements of a contract |
Consideration - both parties give something of value Offer - App + Premium Acceptance/Agreement - agreement between the two Legal Purpose - 18 for health, 14.5 for life |
COAL |
