Health Insurance (Exam FX 2022 WITH COMPLETE SOLUTION)
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Course
FX INSURANCE
Institution
FX INSURANCE
Health Insurance (Exam FX 2022 WITH COMPLETE SOLUTION)
Agent/Producer
A legal representative of an insurance company
Broker
An insurance producer not appointed by an insurer and whom represents the client
Insured
A person covered by an insurance policy
Insurance policy
A legal contract be...
Health Insurance (Exam FX 2022 WITH COMPLETE
SOLUTION)
Agent/Producer
A legal representative of an insurance company
Broker
An insurance producer not appointed by an insurer and whom represents the client
Insured
A person covered by an insurance policy
Insurance policy
A legal contract between a policyowner (and/or insured) and an insurance company
which agrees to pay the insured/beneficiary for losses caused by specific events
Principal
Insurer, company who issues insurance policies
Policyowner
The person entitled to exercise the rights and privileges in a policy
Premium
The money paid to the insurance company for the insurance policy
Reciprocal
A mutual interchange of rights and privileges
Risk
Chance of a loss occurring
Pure Risk
Situations that can only result in a loss
Speculative Risk
Situations that can result in either a loss or gain
Hazard
Conditions or situations that increase the chance of a loss occurring
Physical Hazard
Individual characteristics that increase the chance of a loss (i.e. past medical history,
blindness)
Moral Hazard
Tendencies towards increasing risk such as lying on applications or submitting
fraudulent claims
Morale Hazard
Arise from a state of mind that causes indifference to loss such as carelessness
Peril
Specific cause of a loss such as death, sickness or accidents
Loss
Reduction, decrease, or disappearance of value of the person or property caused by a
named peril
Sharing
Method of dealing with risk where a group with the same or similar exposure to loss
divvy up the losses that occur within that group; reciprocal insurance exchange is a
formal risk-[ ? ] arrangement
, Transfer
Most effective way to handle risk; relieves the insured of the financial losses risks can
bring
Avoidance
Completely eliminating exposure to loss; effective but seldom practical
Retention
AKA self-insurance; insured accepts responsiblity for the loss before the insurance
company pays through use of deductibles and co-payments
Reduction
Act of lessening the possiblity or severity of a loss (i.e. making healthy changes in
lifestyle)
Elements of Insurable Risks
Due to chance, measurable, predictable, not catastrophic, large random loss exposure
Classifications of Insurers
Ownership, domicile, and authority
Law of Agency
"The acts of the agent/producer within the scope of authority are deemed to be acts of
the insurer" is known as the...
Express Authority
Powers granted by the insurer to the agent that are written in the contract
Implied Authority
Powers that the agent is presumed to have that are not explicitly written, but that are
needed to conduct business (i.e. collecting and remitting premiums)
Apparent Authority
AKA Perceived; refers to a situation where a reasonable third party would believe an
agent had certain powers (i.e. using the insurer's stationary, applicant believes the
agent is authorized to transact business on the insurer's behalf)
Fiduciary Responsibility
Being in position of trust
Elements of a Legal Contract
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
Offer
Element of a legal contract; applicant does this when submitting the application
Acceptance
Element of a legal contract; when an insurer approves of an offer in its exact terms and
issues a policy
Consideration
Element of a legal contract; something of value that each party gives to each other
Competent Parties
Element of a legal contract; legal age, metally competent, not under the influence of
drugs or alcohol
Legal Purpose
Element of a legal contract; not against public policy
Indemnity
To restore, but not allow profit from a loss
Representations
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