Pa Life Insurance Terminology

Front 1

What is the uncertainty or chance of a loss occurring

Back 1

Risk

Front 2

Two types of risk

Back 2

Pure and speculative

Front 3

It refers to situations that can only result in a loss or no change

Back 3

Pure risk

Front 4

It involves the opportunity for either loss or gain

Back 4

speculatiove risk

Front 5

a unit of measure used to determine rates cahred for insurance coverage

Back 5

exposure

Front 6

a large number of units having the same or similar exposure to loss are referred to as

Back 6

homogeneous

Front 7

What are conditions or situations that increase the probability of an insured loss occurring

Back 7

hazard

Front 8

3 types of hazards

Back 8

--physical
--moral
--morale

Front 9

the causes of loss insured against in an insurance policy

Back 9

Perils (cause)

Front 10

what is defined as the reduction, decrease or disappearance of value of the person or property insured in a policy

Back 10

loss

Front 11

5 methods of handling risk

Back 11

-share
-transfer
-avoidance
-retention
-reduction

Front 12

method of handling risk that means accepting the risk and confronting it if and when it occurs

Back 12

retention

Front 13

what 6 elements must be present to create an insurable risk

Back 13

--loss must be due to chance
--loss must be definite and measurable
--loss must be predictable
--loss exposure to be insured must be large
--insurance must not be mandatory
--loss cannot be catastrophic

Front 14

an insurable risk involve a loss that is definite as to what 4 things

Back 14

cause
time
place
amount

Front 15

the insuring of risks that are of poorer class than the average risk

Back 15

adverse selection

Front 16

Underwriters protect the insurer against adverse selection by what 3 methods

Back 16

--restriction of coverage
--acceptance only at higher rate
--refusal to accept risk

Front 17

the principle stating that the larger the number of similar exposure units considered, the more closely the loss reported

Back 17

law of large numbers

Front 18

a form of insurance whereby one insurance company (reinsurer) in consideration of a premium paid to it, agrees to indemnify another insurance company (ceding co.) for part or all of its liabilities from insurance policies it has issued

Back 18

reinsurance

Front 19

what does reinsurance protect against

Back 19

catastrophic losses

Front 20

when reinsurance is purchased on a specific policy, it is classified as what

Back 20

facultative reinsurance

Front 21

when an insurer has an automatic reinsurance agreement between itself and the reinsurer in which the reinsurer is bound to accept all risks ceded to it is classified as

Back 21

reinsurance treaty

Front 22

types of insurers

Back 22

--stock companies
--mutual companies
--fraternal benefit societies
--reciprocals
--lloyd's associates

Front 23

Insurance companies owned by the stockholders that share in any profits and losses.

Back 23

stock companies

Front 24

insurance companies owned by the policyholders and profits are returned to the policyholders as non-taxable dividends(refund of premuim)

Back 24

MUTUAL COMPANIES

Front 25

insurance company formed to provide insurance for members of an affiliated lodge, religious org. or fraternal org. with a representative form of goverment

Back 25

fraternal benefit societies

Front 26

an insurance that results from an interchange of reciprocal agreements of indemnity among person known as subscribers.Company put ino effec through and attorney-in-fact

Back 26

reciprocal insurance company or exchange

Front 27

an insurance company that has qualified and received a Certificate of Authority from the Department of Insurance

Back 27

Admitted insurer

Front 28

an insurance company that has not received a Certificate of Authority from the state

Back 28

nonadmitted

Front 29

What does an insurance company receive from the Department of Insurance allowing it to conduct business in the state

Back 29

Certificate of Authority

Front 30

when must a policyholder have an insurable interest in the insured

Back 30

at time of application

Front 31

an insurance company that is incoporated in this state

Back 31

domestic insurer

Front 32

an insurance company that is incorporated in another state

Back 32

foreign insurer

Front 33

an insurance company that is incorporated outside the US>

Back 33

alien insurer

Front 34

an independent entrepreneur, empowered by the insurer that he represents to sell life insurance in a specified territory and appoint subagents

Back 34

general agent

Front 35

a sales force is supervised by a branch manager and is a salaried employee of insurer

Back 35

branch office system

Front 36

an arrangement between the insurer and selected agents to produce business for the insurer

Back 36

person producing general agents

Front 37

an agent will always be deemed to represent who in a transaction

Back 37

insurer

Front 38

3 types of agent authority

Back 38

--expressed
--implied
--apparent

Front 39

the responsibility tha an agents has for the applicant is called

Back 39

fiduciary

Front 40

an agreement between two or more parties enforceable by law

Back 40

contracts

Front 41

what is the consideration on the part of the applicant

Back 41

payment of premuim and health representation made in application

Front 42

what is the consideration of the part of the insurer

Back 42

the promise to pay in the event of loss