Primerica Insurance Exam: General Insurance Already Passed

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Primerica Insurance Exam: General Insurance Already Passed Insurance ✔✔A contract in which one party agrees to indemnify the insured party against loss, damage or liability from an unknown even... t. Insurance transfers ✔✔The reduction, decrease, or disappearance of value of the person or property insured in a policy, caused by a named peril. Risk ✔✔The uncertainty or chance of a loss occurring. Pure risk ✔✔Situations that can only result in a loss or no change Speculative risk ✔✔The opportunity for either loss loss or gain. Hazards ✔✔Conditions or situations that increase the probability of an insured loss occurring. Physical hazards ✔✔Individual characteristics that increase the chances of the cause of loss. Moral hazards ✔✔Tendencies towards increased risk. Morale hazards ✔✔Arises from a state of mind that causes indifference to loss, such as carlessness Perils ✔✔The causes of loss against in an insurance policy Exposure ✔✔The unit of measure used to determine rates charged for insurance coverage. Factors: The age of the insured, insured medical history, occupation, and sex Avoidance ✔✔Eliminating exposure to a loss. Retention ✔✔The planned assumption of risk by an insured through the use of deductibles, copayments, or self-insurance. Purpose: To reduce expenses and improve cash flow, to increase control of claim reserving and claims settlement, to fund for losses that cannot be insured. Sharing ✔✔Method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share share the losses that occur within that group. Reduction ✔✔Attempt to lessen the possibility or severity of a loss. Transfer ✔✔The risk of financial loss us assigned to another party. Law of large number ✔✔The larger the number of people with a similar exposure to loss, the more predictable actual losses will be. Adverse selection ✔✔The insuring of risks that are more prone to losses than the average risk. Stock companies ✔✔Owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses. Nonparticipating ✔✔Policy does not pay dividends dividends to policyowners. Mutual companies ✔✔Owned by the policyowners and issue nontaxable dividends Authorized insurers ✔✔Insurers who meet the state's financial requirements and are approved to transact business in the state Unauthorized Insurers ✔✔Insurers who have not been approved to do business in the state Surplus Lines ✔✔Insurance that is not available in the regular market place from admitted insurers Domestic ✔✔Insurance company that is incorporated in the state Foreign ✔✔Insurance company that is incorporated in another state or territorial possession. Alien ✔✔Insurance company that is incorporated outside the United States Law of agency ✔✔The relationship between the principal and the agent/principal. Express authority ✔✔The authority a principal intends to grant to an agent by means of the agent's contract Implied authority ✔✔Authority not expressed or written into the contract, but which the agent is assumed to have in order to transact business of insurance for the principal Apparent authority ✔✔The appearance or assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created Fiduciary responsibility ✔✔An agent that handles the funds of the insured and the insurer Contract ✔✔An agreement between two or more parties enforceable by law Elements of a Legal Contract ✔✔1. Agreement 2. Consideration 3. Competent parties 4. Legal Purpose Acceptance ✔✔When an insurer's underwriter approves the application and issues a policy Consideration ✔✔The binding force in any contract Competent parties ✔✔1. Both parties are legal age. 2. Mentally competent to understand the contract. 3. Not under the influence of alcohol and drugs. Legal ✔✔Insurable interest and consent Aleatory ✔✔An exchange of unequal amounts or values. "Ypu are not going to pay what you collect." Contact of Adhesion ✔✔Prepared by one of the parties (insurer) and accepted by rejected by the other party (insured) "Take-it-or-leave-it" basis. Unilateral contract ✔✔Only one of the parties to the contract is legal bound to do anything Conditional Contract ✔✔Certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills it's obligations. Representations ✔✔Statements believed to be true to the best of one's knowledge Material misrepresentation ✔✔A statement that if discovered, would alter the underwriting decision of the insurance company. Warranty ✔✔Absolutely true statement upon which the validity of the insurance policy depends. Concealment ✔✔Intentional withholding of information of a material fact that is crucial in making a decision. Fraud ✔✔The intentional misrepresentation or intentional concealment of a material used to induce another party to make or refrain from making a contract, or to deceive or cheat a party. Waiver ✔✔The voluntary act of relinquishing a legal right, claim or privilege Estoppel ✔✔ [Show More]

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