Life Insurance Course Ch 2

Front 1

stock insurance company

Back 1

a publicly owned, private org that is incorporated under state laws for the purpose of making a profit for its stockholders.

Front 2

mutual insurance company

Back 2

org'd and incorp'd under state laws, no stockholders. Policyholders are the owners. they have the right to vote for board members. by issuing participating policies that pay policy dividends, mutual insurers return excess premiums paid to policy owners. policy dividends are not taxable.

Front 3

reinsurance

Back 3

an arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer. The company transferring the risk is called the ceding company. The company assuming the risk in the reinsurer.

Front 4

self-insurers

Back 4

establishes its own reserves to cover potential losses. a form of risk retention that is often used by large companies for funding workers' compensation and pension plans. Will often look to an insurance company to provide insurance above a certain maximum level of loss, but will bear the amount of loss below that amount.

Front 5

solicitors

Back 5

act for agents by seeking prospects, receiving applications, or collecting premiums, but usually do not have the authority to bind coverage.

Front 6

consultant

Back 6

an independent adviser specializing in the design, implementation, and administration of insurance sharing plans. Usually licensed.

Front 7

Special agents

Back 7

do not actually solicit insurance business, work as field representative, helping a company's central office and the agency's force in their territory.

Front 8

individuals who sell variable contracts must:

Back 8

be licensed by the NASD/FINRA which requires passing series six or seven exams.

Front 9

human life value approach

Back 9

focuses on an individual's future stream of income. (how much will the insured make?)

Front 10

needs approach

Back 10

focuses on the needs of survivors, including funeral expenses, final illness, continuing family income needs, children education, and spousal retirement income. (how much the survivor needs)

Front 11

what other sources of funds must be considered when calculating life insurance needs?

Back 11

social security income, medicare and medicaid, group retirement plans, savings and investments, other income (i.e. rental property), and annuities and other insurance.

Front 12

what is the best source of underwriting information?

Back 12

the application

Front 13

agents represent the ___________ and brokers represent the ___________.

Back 13

insurer, buyer.

Front 14

When and why must an application's occupation be listed?

Back 14

When discussing disability income insurance because some occupations present a higher risk of loss.

Front 15

third party contract

Back 15

when the owner and the proposed insured are different. This would require three signatures.

Front 16

Why is the agent's signature required?

Back 16

The insurer needs the agent to witness that the proposed insured is actually still alive.

Front 17

what happens if the insurance company misses an omission on the application and issues the policy anyway?

Back 17

possible waiver of content: they'd have to cover the loss anyway.

Front 18

warranty

Back 18

a statement that is guaranteed to be true

Front 19

representation

Back 19

a statement that is believed to be true to the best of your knowledge

Front 20

Is information on a life app considered a warranty or a representation?

Back 20

A representation

Front 21

a receipt is proof that:

Back 21

coverage under the contract will go into effect following the completion of a medical examination if one is required.

Front 22

conditional receipt

Back 22

under teh terms of conditional receipt, coverage becomes effective as of the date of the receipt if the application is approved for the plan of insurance applied for, the coverage applied for, and the premium rate applied for. This receipt is normally provided to an application when the initial premium is paid at the time of application.

Front 23

When does conditional receipt not apply?

Back 23

failed medical exam or first premium not paid or premium offered after underwriting is more than premium that was initially paid, or died before medical exam.

Front 24

Agent is required to deliver to the applicant_____________ and ___________ before _____________.

Back 24

a life insurance buyer's guide and a Policy Summary, by the time of policy delivery.

Front 25

can AIDS/HIV be an exclusion to claims payment?

Back 25

No.

Front 26

MIB

Back 26

Medical Information Bureau is an intercompany data bank that allows member insurance companies to check applicants against the Bureau's record of medical impairments that were uncovered during the underwriting of life or health applications previously submitted (to any member company) by a prospective insured.

Front 27

can AIDS/HIV be an exclusion to claims payment?

Back 27

No.

Front 28

MIB

Back 28

Medical Information Bureau is an intercompany data bank that allows member insurance companies to check applicants against the Bureau's record of medical impairments that were uncovered during the underwriting of life or health applications previously submitted (to any member company) by a prospective insured.

Front 29

when do you need to obtain a statement of continuing good health?

Back 29

when policy is delivered and initial premiums is just then being paid.

Front 30

producer responsibilities as field underwriter are:

Back 30

suitability of the insurance being applied for, complete the application with th eapplicant, agent's report, obtainall proper signatures, explain the sources of insurability info, disclosures, and delivery of policy.