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44 Cards in this Set
- Front
- Back
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What is insurance |
It is a transfer of risk of loss . The cost of an insured's loss is transferred over to the insurer and spread among other insured |
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The four elements that make a contract binding |
- agreement ( offer and acceptance) - consideration - competent parties - legal purpose |
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What is Offer and acceptance |
Offer: when applicant sumbit the application Acceptance: when insurer underwriter approves application and issue a policy. |
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What is consideration in insurance |
Is the value the insured and the insurer offer to each other, Insurers consideration is the premium and statements , the insurer promise to pay in case of loss. |
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What is legal purpose |
A contract which is not against public policy (legal) |
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What is a contract Adhesion? |
A contract prepared by the insurer which the onsured has no say in. Take it or leave it basis. |
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Aleatory Contract |
Is a contract where values are unequal ex: insured pay way less than what insurer promise to pay. |
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What is an Unilateral contract |
A contract where only one side legally bound to act . Insurer is legally bound to pay in case of a loss. |
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What is Conditional contract |
require conditions on both side, ex: provide proof of loss and pay premium for company to cover claim. |
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What is a warranty ? |
A true statement made which make the insurance policy valid. Breach of warranty can cause cancellation or return of premium. |
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What is representation? |
Statements given by the insured to the best of their knowledgeb" believe to be true"(ex: answers on the application |
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What is misrepresentation? |
Untrue statement on an application, could make the contract void. |
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What is material Misrepresentation? |
Is a type of fraud, a statement if discovered would alter the decision of the insured company. |
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What is risk pooling |
When individuals and entities put together to insure themselves and cover against loss. |
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What is a contract Adhesion? |
Is a type of contract the insured has no say in, and not up for negotiation, take it or leave it type, ambiguities in the contract are settled in favor of the insured. |
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What make up the application process |
1- general information 2- medical information |
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What is a field underwriter? |
Is the agent that help clients take insurance.also called a life insurance producer. |
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What are some of the responsibility of the agent/ underwriter? |
1- proper solicitation of applicants 2- Help prevent adverse selection 3- Comple application 4- Obtain signatures 5- collect the premium, issue receipt 6- Delivering the Policy |
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What are the requirements for signatures |
- all policies must be signed - business applying for employees must have the employees signed - only exception is for minors |
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What is not allowed when changing or correcting an application? |
Never white out or erase information |
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What happens when an applicant do not fill out the whole application? |
1- The insurer has to return it 2- If the insurer do not return it is interpreted as the insurer wave the right to have an answer. 3- They then cannot deny coverage based on these unanswered questions. |
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What is a conditional reciept? |
A form normally required to be signed by an agent and given to a prospective life insurance policy insured/owner at the time a new application is completed. If you pay premium then you will sign.
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What happens if you die under a Conditional reciept |
If you are approved they will still pay, if they deny you, then they won't. |
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What is underwriting? |
Is the risk selection and classification process |
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What is an insurable interest? |
Is the reason why the person take insurance (what they trying to protect) Some kind of loss (money or asset or own life) that the insured accept to purchase insurance at the time of application (ex: premium)
Insurable interest is an investment with the intent to protect the purchaser from financial loss |
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What fair credit reporting Act does? |
Write policy that ensure people's records are confidential, accurate, relevant and properly used. Also protect consumers against bad informations about themselves. |
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What reports they use to investigate policy owner credit |
Consumers report and investigating consumer reports |
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What is the difference between consumer reports and investigating consumer reports? |
Investigate consumer reports may require investigating individuals through family, friends, neighbors, . Applicant must be notified |
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What is MIB (Medical Information Bureau)? |
Non-profit organization own by insurance companies used to compare medical information gathered of applicants. |
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What are the two types of medical examination the insurance may require? |
1- Paramedical report: done bt paramedics or a nurse 2- attending physician statement: (Aps). Done by medical practitioner. |
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What is require if HIV test is asked of the applicant? |
disclose the use of testing, obtain a written consent, establish written policies and procedures |
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What is HIPAA( Health insurance portability and accountability Act)? |
A federal law that protects health information |
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What is a written disclosure statement? |
Information given to the client at the time of signing contains information about cost and coverage of the insurance being given. |
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What is a disclosure authorization form |
Use to give to applicant whom the insurer intend to investigate explaining its process. |
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What are the three classification in the risk classifications |
Standard, substandard, preferred, declined risks. |
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STOLI stranger originated insurance? |
Illigal way to take insurance for a stranger or someone you have no common interest with. |
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What is IOLI ( investor owned life insurance ) . |
an investor was no interest in the insured initially transaction designed to transfer the policy ownership rights to someone with no insurable interest and the insured and who hopes to make a profit up on the death of the insured Or Selling an existing life insurance policy. |
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What is a policy summary? |
Id a written statement describing the features and elements of the policy being issued. Including the following - agent personal contact & info - Insurer contact info - Generic name of Policy - cash value - dividend - surrender value - death benefit value |
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Whats the difference between the buyer's guide and policy summary? |
Buyers guide provide generic info on various policies while policy summary provide info on the Policy being issued. |
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Illustration |
Is a presentation that includes non guaranteed elements of a policy. Illustration must do the following: - Distinguish between guaranteed & projected amount - state an illustration isn't part of the contract - identity values that are not guaranteed |
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What is Gramm- Leach- Bliley Act |
Its a Act that state that insurance company may not share personal info to third party companies. except. - consumer is warned regarding this - consumer given opportunity to prevent it befor disclosure - customer told they have non-disclosure options. |
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What are requirement of the disclosure of Gramm-Bliley Act? |
2 disclosure - customer relations is established - before disclosing protected information - customer must receive an annual privacy disclosure |
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USA Patriot aCT, FinCen, AmL |
Patriot aCT: policy establish to fight terrorists. FinCen: financial crime enforcement Network AML: Anti-money- laundering: standards required by FinCen to all institutions. |
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SAR (suspicious activity report) |
-must report the following,: deposit, withdrawal transfers $5000 and more - no business or legal purpose - intend to mask funds from illigal activities. File to FinCen using form 108 within 30 days. Red flags - fake Id - similar ID use - transaction just below 5k - two business break transaction in two - Same customer at different locations |
