Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
30 Cards in this Set
- Front
- Back
What is the term that describes balancing preferred risks with poor risks, and average risks in the middle?
|
Profitable distribution of exposures.
|
|
The law of large numbers is a principal that basically says...
|
the larger the amount of information gathered, the more reliable that information will be.
|
|
Underwriting is a process of..
|
risk selection, classification, rating, and determination of coverage's.
|
|
When can a representation be altered or withdrawn?
|
it can be altered or withdrawn only before the insurance is issued.
|
|
What is rescission?
|
Rescission is the revocation of a contract.
|
|
Which of the following describes the situation when one party intentionally gives false information in order to benefit from unlawful gain?
|
Fraud.
|
|
Insurable interest is best described as...
|
the policy owner must expect to suffer a loss when the insured dies or becomes disabled. The policy owner is expected to benefit from the insured's continuing to live.
|
|
Which of the following is NOT part of a contract that is enforced by the law?
|
tort law.
in order to be enforceable a contract must have: offer and acceptance, consideration, competent parties, and legal purpose. |
|
For insurable interest to exist...
|
the insured must establish that they actually own something to be insured.
|
|
An insurance contract promises to pay benefits based upon a future uncertainty such as death or illness describes which feature of an insurance contract?
|
Aleatory contract.
is based on an uncertain future events. |
|
Hazard is best defined as...
|
anything that increases the chance of loss or severity of loss due to a peril.
|
|
An MGA acts as an agent and produces and underwrites gross direct written premium equal to OR more than ________% of the policyholder surplus as reported in the insurers last annual statement..
|
5%
|
|
Which are the main types of risks?
|
Speculative and pure
|
|
In regards to insurance, risk can be defined as...
|
uncertainty regarding loss.
|
|
Ideally insurable risk means...
|
the risk is financially within reason and is reasonable to insure.
|
|
For an insurance contract to be enforceable, which party must be considered competent?
|
The applicant.
|
|
The principle used as the basis for establishing probability of losses occurring in the insurance industry is...
|
the Law of large numbers
|
|
Risk is
|
the uncertainty or chance of a loss occurring.
|
|
________ involves the exchange of a premium for a promise, which means that the insurer is the only party making a legally enforceable promise to pay a claim.
|
Unilateral Contract
|
|
The only information that does NOT need to be communicated in a contract is...
|
information the other party deems as confidential.
|
|
Alcoholism is an example of what type of hazard?
|
Moral Hazard.
|
|
The price of insurance for each exposure is referred to as..
|
the Rate
|
|
A peril is..
|
the actual cause of the loss.
|
|
Insurance is a contract whereby one undertakes to indemnify another against:
|
loss, damage or liability arising from a contingent or unknown event.
|
|
The function of insurance is best described as...
|
it spreads financial risk over a large group so as to minimize the loss to any one individual.
|
|
All of of the following describe an MGA except
|
the legal entity which acts on behalf of, or in place of, its principal.
an MGA can appoint/supervise/terminate the appointment of local agents in that territory. collects premium. Can accept/decline risks. |
|
A hazard that deals with attitudes, behavior and habits is an example of
|
Moral hazard
|
|
What are the four major elements of a contract?
|
Agreement, competent parties, legal purpose, consideration.
|
|
What is meant by the term adverse selection?
|
the tendency of people with greater than average exposures to loss will purchase insurance.
|
|
Balancing poor risk with preferred risk, with the average or standard risk being in the middle is known as what?
|
distribution of exposures.
|