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RMIN 4000 Exam 3|152 Questions and Answers
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RMIN 4000 Exam 3|152 Questions and Answers
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RMIN 4000 Exam 3|152 Questions andAnswers
Basic Parts of an Insurance Contract - -declarations, definitions, insuring
agreement, exclusions, conditions, miscellaneous provisions
- declaration - -part of an insurance contract that tells who, what, when, and
where, lists the amount of coverage, premiums, and deductibles, and is
usually the very first page
- definition - -part of the insurance contract that defines terms like "your
covered auto"
- Insuring Agreement - -part of contract that summarizes major promises of
insurer; either named perils or all-risks
- named perils - -if a peril is not named, it is not covered under the
insurance contract
- all risks - -all perils are covered unless they are specifically excluded
- reasons for exclusions - -some perils are considered uninsurable; some
hazards are extraordinary; coverage provided by other contracts; moral
hazard problems; coverage not needed by typical insureds
- conditions - -provisions in the insurance policy that qualify or limit the
insurer's promise to perform; ex: notifying insurer after loss occurs,
protecting property from further damage after a loss, cooperating with the
insurer in the event of a liability lawsuit
- Misc. Provisions in P/C Insurance - -assignment of policy, cancellation,
"other-insurance" provisions
- Misc. Provisions in Life/Health Insurance - -grace period; reinstatement of
lapsed policy
- endorsements and riders - -provisions that legally add to, delete from, or
modify the original policy
- deductible - -a specific amount that is subtracted from the indemnity
payment (that would otherwise be total); found in most forms of insurance
but not in life or liability
, - purposes of deductibles - -eliminate small claims, reduce moral and
morale hazard, provide flexibility and choice to insured
- elimination period - -a waiting period that must be satisfied before a claim
is paid; typically used in disability contracts
- coinsurance in property insurance - -requires the insured to insure the
property to a stated percentage pf its insurable value; if not, the insured
must share the loss; payment will never exceed the limit of coverage or the
amount of the loss
- coinsurance formula - -(amount of insurance purchases/amount of
insurance required)*loss-deductible
- purpose of coinsurance - -creates equity in rating (most losses are not toal
losses; rates would have to be higher if everyone insured for only partial
losses, insurance to value requirements lower rates for consumers)
- coinsurance in health insurance - -used in conjunction with a deductible;
usually there is an "out-of-pocket" limit wherein deductibles and amount of
copay is capped; purpose is to prevent overuse of benefits and reduce
premiums
- straight deductible - -must be satisfied for each and every loss
- aggregate deductible - -insurer pays only after a certain amount of total
losses is reached during a specific time period, then pays all covered losses
- Pro-Rata - -when a loss is covered by multiple insurers, the insurers cover
the loss in equal percentages to how much they paid in
- Equal Shares - -when a loss is covered by multiple insurers, the insurers
cover the loss in equal amounts up to the amount that they paid in
- Primary/ Excess - -when a loss is covered by multiple insurers, the insurers
cover the loss up to how much they paid in before another insurer even
steps in to cover the loss
- premature death - -death of a family head with outstanding unfulfilled
financial obligations
- Financial Impact of Premature Death concerning single people - -have no
dependents, therefore they probably will not purchase a life insurance policy
- Financial Impact of Premature Death concerning single-parent families - -
they will want life insurance but might not be able to afford
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