Florida Insurance 2-14 Exam Terms
Insurance - CORRECT ANSWER - Financial protection against loss or harm - An arrangement by which
company gives customers financial protection against loss or harm such as theft or illness in return for
premium payments.
Life Insurance - CORRECT ANSWER - Is ba...
Florida Insurance 2-14 Exam Terms
Insurance - CORRECT ANSWER - Financial protection against loss or harm - An arrangement by which
company gives customers financial protection against loss or harm such as theft or illness in return for
premium payments.
Life Insurance - CORRECT ANSWER - Is based on actuarial or mathematical principles and guarantees a
specified sum of money upon the death of the person who is insured.
Annuities - CORRECT ANSWER - Provide a stream of income by making a series of payments to the
annuitant for the annuitant's lifetime or for a specifically designated period of time.
Risk - CORRECT ANSWER - Uncertainty regarding loss; the probability of loss occurring for an insured or
prospect
Speculative Risks - CORRECT ANSWER - Involve the possibility of loss and gain. (Not Insurable)
Pure Risks - CORRECT ANSWER - Involve the possibility of loss only. (Insurable)
Peril - CORRECT ANSWER - Cause of risk (when a building burns, fire is the peril)
Hazards - CORRECT ANSWER - The source of danger
Physical Hazard - CORRECT ANSWER - A hazard being of physical nature.
A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness)
Risk Avoidance - CORRECT ANSWER - Occurs when individuals evade risk entirely. "If you don't drive,
then you avoid getting in an auto accident."
,Risk Reduction - CORRECT ANSWER - Takes place when the chances of loss are lessened. Changing a
lifestyle to minimize a known risk.
Risk Retention - CORRECT ANSWER - Being aware of the risks involved and taking precautions for
financial protection. Auto policy's deductible is an illustration of risk retention
Risk Transference - CORRECT ANSWER - The act of shifting the responsibility of risk to another in the
form of an insurance contract.
Adverse Selection - CORRECT ANSWER - Refers to the tendency for those individuals who present less
favorable insurance risk to seek or continue insurance to a great extent than other risks.
Insuring Pure Risk - CORRECT ANSWER - Loss must be due to chance
Assessment Mutual Insurers - CORRECT ANSWER - Prohibited in Florida
,Pure Assessment Mutual Company - CORRECT ANSWER - Don't pay premium and total loss is divided
among members
Lloyds of London - CORRECT ANSWER - NOT considered an insurance company
- An association of individuals and companies that individually underwriter insurance.
Fraternal Benefit Societies - CORRECT ANSWER - Must be nonprofit, have a lodge system, and offer
insurance to its members only
Home Service Insurer - CORRECT ANSWER - Insurer that offers relatively small policies with premiums
payable on a weekly basis.
Captive Agents - CORRECT ANSWER - A.k.a. Career agents
Works for only one insurer and sells only that insurers products
Independent Agents - CORRECT ANSWER - Is self-governing and actually works for himself. This affords
him the versatility to represent several insurers and their different insurance products.
Special Agents - CORRECT ANSWER - Usually not license and don't sell insurance. Assist insurance
companies field representatives.
Career Agency System - CORRECT ANSWER - (GA) - Build sales staffs and agents are treated as
employees. They are recruited and trained. A principal of the company supervises agents.
Personal Producing General Agency System - CORRECT ANSWER - (PPGA) - The agent supplies his own
working environment. Agents hired by a PPGA are considered employees of the PPGA, not the insurance
company, and are supervised by the regional salary.
, Independent Agency System - CORRECT ANSWER - Agents represent several insurers through signed
contracts and are paid on commission or fee basis, not through salary.
Regulating the business of insurance - CORRECT ANSWER - Legislation
The Court System
State Insurance Departments
Paul v. Virginia - CORRECT ANSWER - - State tried to control insurance domiciled from another state.
- U.S. Supreme Court sided against insurance company
- Upholding the right of sate to regulate insurance
- States WIN
United States v. Southeastern Underwriters Association (SEUA) - CORRECT ANSWER - - Ruling is a form
of interstate commerce
- Should be regulated by the federal government
- Fed Gov. WINS
The McCarran-Ferguson Act - CORRECT ANSWER - - Gave back some regulatory authority to the states
- Did not provide the states to regulate individually
- Insurance regulated by state law "is in the publics best interest"
Intervention by SEC - CORRECT ANSWER - - Dealing with variable annuities
- Securities and Exchange Commission (SEC) should regulate the variable annuities (since they're used
for investments) & variable life insurance.
- Therefore, agents must obey the rules to both SEC and state regulation.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Smartdove. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.49. You're not tied to anything after your purchase.
