FLORIDA INSURANCE 2-14 EXAM TERMS QUESTIONS AND ANSWERS (100% SCORES)
74 views 2 purchases
Module
Florida insurance
Institution
Florida Insurance
FLORIDA INSURANCE 2-14 EXAM
TERMS QUESTIONS AND ANSWERS
(100% SCORES)
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.
L...
FLORIDA INSURANCE 2 -14 EXAM TERMS QUESTIONS AND ANSWERS (100% SCORES) 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 Loss must be definite and measurable Risk must be predictable Loss must NOT be catastrophic Exposure to loss must be large Loss exposures must be randomly selected Mutual Insurers - CORRECT ANSWER -Participating policies Owned by policyholders Vote for directors and trustees Directors and management have control Typically higher rates 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. Fair Credit Reporting Act - CORRECT ANSWER -- Fair and accurate report of information about consumers - Insurers must inform them about any investigations being made - Then insurers must let the applicants know the name of the reporting agency Financial Services Modernization Act - CORRECT ANSWER -- Revoking the Glass -
Steagall Act - This changed the industry so commercial banks, investment banks, retail brokerages, and insurance companies can now enter each other's lines of business Admitted insurance company - CORRECT ANSWER -- Office of Insurance Regulation has licensed them to carry out business in Florida Nonadmitted Insurance Company - CORRECT ANSWER -- Have not been licensed by the the Florida Office of Insurance Regulation Policy Replacement - CORRECT ANSWER -- An action which eliminates the original policy or diminishes its benefits or values Bad policy remplacement issues - CORRECT ANSWER -- Most the first year's premium is consumed by the commission - The premium is higher due to the insured's advanced age - Waiting periods begin anew Misuse of Premiums - CORRECT ANSWER -- Improper use of premiums collected by an insurance producer - Depositing a client's premium in own personal account Rebating - CORRECT ANSWER -- Florida and California are the only two states that allow rebating - When any part of commission or anything else of value is given to the insured as a incentive to buy a policy - Agent must keep copies of rebating schedules for five years NAIC - CORRECT ANSWER -- National Association of Insurance Commissioners - No legal power of its own - Encourages uniformity in state insurance laws and regulations Florida Insurance Guaranty Association - CORRECT ANSWER -- Funded by insurance companies through assessments -FIGA is part of a non -profit, - Guaranty associations protect policyholders and claimants. - Holds three separate accounts: - Health Insurance - Life Insurance - Annuity Accounts NAIFA - CORRECT ANSWER -- National Association of Insurance and Financial Advisors (NAIFA) - Designed to protect agents - Dedicated to supporting life insurance industry A.M. Best Rating Agency - CORRECT ANSWER -- Profitability, leverage, & liquidity - A++ to F and S (suspended)
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 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 StudyCenter1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £13.05. You're not tied to anything after your purchase.
