Exam (elaborations)
Massachusetts Life and Health Insurance Exam|381 Questions and Answers
Massachusetts Life and Health Insurance Exam|381 Questions and Answers
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Massachusetts Life and Health InsuranceExam|381 Questions and Answers
Insurance - -Transfer of Risk
- Risk - -Uncertainty/ Possibility of Loss
- Exposure - -Risks for which the insurance company would be liable
- Peril - -Cause of Loss
- Hazard - -Something that causes an increase in the chance of loss
- Physical Hazard - -Hazard that can be seen
- Moral Hazard - -A belief that intentionally causing a loss is acceptable
- Morale Hazard - -Carelessness
- STARR - -Method of handling risk
- S- Method of handling risks - -Sharing
- T- Method of handling risk - -Transfer
- A- Method of handling risk - -Avoidance
- R- Method of handling risk - -Retention
- R- Method of handling risk - -Reduction
- Contract Policy - -An agreement between the insured and the insurer
- Law of Large Numbers - -The larger the group, the more accurate losses
can be predicted
- CANHAM Risks - -Can be insured with the following characteristics
- C- CANHAM Risks - -Calculable
- A- CANHAM Risks - -Affordable
- N- CANHAM Risks - -Non- Catastrophic
,- H- CANHAM Risks - -Homogeneous
- A- CANHAM Risks - -Accidental
- M- CANHAM Risks - -Measurable
- Adverse Selection - -risks that have a greater than average chance of loss
- Reinsurance- - -An insurance company sells some of its risk to other
insurance companies.
- Facultative Reinsurance - -the reinsurer evaluates each risk before
allowing the transfer
- Treaty Reinsurance - -the reinsurer accepts the transfer according to an
agreement called a treaty
- Stock Insurer - -An insurer that is owned by its stockholders and formed as
a corporation for the purpose of earning a profit for the stockholders.- Issues
Non Par Policies
- Mutual Insurer - -An insurer that is owned by its policyholders and formed
as a corporation for the purpose of providing insurance to them.- Non
Taxable dividends & Participating Polcies
- Fraternal Insurer - -provides insurance and other benefits
must be a member of the society to get the benefits
- Reciprocal Insurers - -unincorporated groups of people that provide
insurance for one another through individual indemnity agreements
- Llyod's Associations - -Organizations that provide support facilities for
underwriters or groups of individuals that accept insurance risk.
- Risk Retention Group - -A liability insurance company owned by its
members, which are exposed to similar liability risks by virtue of being in the
same business or industry.
- Risk Purchasing Groups - -Groups of people with similar insurance needs
who form an organization to buy insurance as a group.
- Self-insurance - -a business that pays its own claims
- Residual Market - -insurance from the state or federal government
- Insurance Company Locations - -Domestic, Foreign, and Alien
,- Certificate of Authority - -state license for an insurance company
- Admitted or Authorized - -state requires the insurance company to have a
certificate of authority
- Non-admitted - -unauthorized-insurance company not required to have a
Certificate of Authority from the state
- Surplus Lines - -any type of insurance for which there is no available
market within the state, and the coverage must be placed with a non
admitted insurer
- Methods of Marketing - -- Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
- Agency - -The insurance agent acts on behalf of principal (Insurance
Company)
- Agent Authority - -express, implied, apparent
- Fiduciary Trust - -- Promptly sends premiums to insurer
- Has knowledge of products
- Complies with laws and regulations
- Does not commingle funds
- Legal Contract - -Consideration, Legal Purpose, Offer (Made by Insured),
Acceptance, Competent Parties
- Adhesion - -Policy written by the insurance company
- aleatory - -not equal value - small premium for a large amount of coverage
- Utmost Good Faith - -An obligation to act in complete honesty and to
disclose all relevant facts.
- indemnity - -pay for the loss but with no gain
- representation - -believed to be true
- Misrepresentation - -information that is not true, but would not affect the
insurance company decision
, - Material Misrepresentation - -- a false statement that changes the
outcome of issuing a policy
- generally with the health statement
- warranty - -guaranteed to be true
- concealment - -failure to disclose known facts
- fraud - -intentional act to cheat another
- waiver - -voluntary giving up of a right
- estoppel - -actions reasonably relied on by one party cant be denied by
the party that accepted the same previously
- Fraud and False Stataments - -Fine and or imprisonment (10-15 years)
*Embezzlement included
- Changes in the Application - -must be initialed by the applicant
- Backdating - -Usually no more than 6 months
- Required Signatures - -- insured
- producer/agent
- applicant (if not the insured)
- producers report - -- completed by the producer (agent).
- not attached to policy if issued.
- Conditional Receipt - -Premium with the application; coverage effective as
of the date of application or medical exams - whichever is later
- Binding Receipt - -Temporary, not commmon in life insurance
- Underwriting Sources of Information - -application, medical exams,
physicians statement, AIDS Testing, Medical Information Buereau, Consumer
Reports, Investigative Reports
- Classification of Risks - -Standard, Preferred, Substandard, Declined
- Agent Delivery - -Usually must get signed delivery receipt
- Statement of Good Health - -Required if no premium with application, if
health changed- agent can't deliver policy
- Effective Date of coverage - -- Terms of conditional receipt is issued
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