Fl Life, Health and Annuities Licensing 2-15
(Questions and Answers, 100% Verified)
3 ways insurance contracts are different than other legally binding documents
Number one. They are aleatory. Meaning the insured pays a premium but may not
receive anything back.
Number 2. They are contracts of adhesion meaning the contract was prepared by
one party.
number 3. They are unilateral meaning only the insurance company promises
anything in the contract
How long life insurance has to challenge the validity of a contract due to fraud
Typically 2 years. Can't contest- after if found out fraud occurred during
application.
Fiduciary
A person who holds a position of special trust and confidence.
Example: when they accept premium payments on behalf of the insurer that person
is a fiduciary.
Express authority
The intended power given by the principal to the agent.
Granted by the agency contract.
Ex: agent has the express authority to solicit applications for insurance on behalf of
the company.
Legal purpose
For a contract to be enforceable in court the object of it and its intent must be legal.
Consideration
in exchange for a member's premium the insurer promises to pay when there is a
loss.
,Perils, hazard, risk
A peril is the cause of a risk. A peril is the immediate specific event causing loss
and giving rise to risk. When a building burns, fire is the peril.
A hazard is the source of danger. The hazard is the underlying factor behind the
peril that leads to the probability of a particular loss to the insurer. It is the active
ingredient that could create a peril, which could then lead to a particular loss event
Independent agents
Cell all plans, Blue Cross Blue Shield, Humana, etc
Captive or career agent
Can only sell one companies insurance policies
Agent vs broker
Both are known as producers.
Agent: tied to an insurance company.
Broker: represents the buyer and can sell many insurance carriers
HMOs are distinct because of what?
They provide the insurance and the health care itself.
Reinsurers
Insurance for an insurance company
mutualization vs demutualization
Mutual: going from stock insurance company to Mutual Insurance Company.
De mutual: the opposite
Aleatory contract
A contract that:
- there is an element of chance for both parties
- dollar values exchanged may not be equal.
Ex: member pays premium but may not receive benefit for a long time.
Insurance contract is conditional in that...
, The insurance company agrees to pay benefits only when there is a loss
Valued contract
The insurer pays a specified amount of money to or on behalf of the insured upon
the occurrence of a defined loss.
the money amount is not related to the extent of the loss.
Ex: a life insurance policy is an example of a valued contract.
Conditional receipt
Member pays the initial premium, on the condition that they will make it through
enrollment and are eligible.
- it is the ethical responsibility of the agent to explain this.
Concealment
The failure of the applicant to disclose a known material fact when applying for
insurance
The fair credit reporting act of 1970
- protects an individual's right to privacy
- law requires fair and accurate reporting of information about consumers
- insurance must inform applicants about any investigations
- if something is used to deny or charge higher rates, applicant must be given the
name of the reporting agency
Assessment mutual company
If premiums don't cover cost of losses, co. Can assign further premium charges.
Two types that are based on how premiums are charged
- pure assessment company: Premium is only paid when loss occurs
- advanced premium company: premium is paid at start of policy, money left over
is refunded after insurer adjusts for cost of business
3 incompetent applicant possibilities for a contract
(Questions and Answers, 100% Verified)
3 ways insurance contracts are different than other legally binding documents
Number one. They are aleatory. Meaning the insured pays a premium but may not
receive anything back.
Number 2. They are contracts of adhesion meaning the contract was prepared by
one party.
number 3. They are unilateral meaning only the insurance company promises
anything in the contract
How long life insurance has to challenge the validity of a contract due to fraud
Typically 2 years. Can't contest- after if found out fraud occurred during
application.
Fiduciary
A person who holds a position of special trust and confidence.
Example: when they accept premium payments on behalf of the insurer that person
is a fiduciary.
Express authority
The intended power given by the principal to the agent.
Granted by the agency contract.
Ex: agent has the express authority to solicit applications for insurance on behalf of
the company.
Legal purpose
For a contract to be enforceable in court the object of it and its intent must be legal.
Consideration
in exchange for a member's premium the insurer promises to pay when there is a
loss.
,Perils, hazard, risk
A peril is the cause of a risk. A peril is the immediate specific event causing loss
and giving rise to risk. When a building burns, fire is the peril.
A hazard is the source of danger. The hazard is the underlying factor behind the
peril that leads to the probability of a particular loss to the insurer. It is the active
ingredient that could create a peril, which could then lead to a particular loss event
Independent agents
Cell all plans, Blue Cross Blue Shield, Humana, etc
Captive or career agent
Can only sell one companies insurance policies
Agent vs broker
Both are known as producers.
Agent: tied to an insurance company.
Broker: represents the buyer and can sell many insurance carriers
HMOs are distinct because of what?
They provide the insurance and the health care itself.
Reinsurers
Insurance for an insurance company
mutualization vs demutualization
Mutual: going from stock insurance company to Mutual Insurance Company.
De mutual: the opposite
Aleatory contract
A contract that:
- there is an element of chance for both parties
- dollar values exchanged may not be equal.
Ex: member pays premium but may not receive benefit for a long time.
Insurance contract is conditional in that...
, The insurance company agrees to pay benefits only when there is a loss
Valued contract
The insurer pays a specified amount of money to or on behalf of the insured upon
the occurrence of a defined loss.
the money amount is not related to the extent of the loss.
Ex: a life insurance policy is an example of a valued contract.
Conditional receipt
Member pays the initial premium, on the condition that they will make it through
enrollment and are eligible.
- it is the ethical responsibility of the agent to explain this.
Concealment
The failure of the applicant to disclose a known material fact when applying for
insurance
The fair credit reporting act of 1970
- protects an individual's right to privacy
- law requires fair and accurate reporting of information about consumers
- insurance must inform applicants about any investigations
- if something is used to deny or charge higher rates, applicant must be given the
name of the reporting agency
Assessment mutual company
If premiums don't cover cost of losses, co. Can assign further premium charges.
Two types that are based on how premiums are charged
- pure assessment company: Premium is only paid when loss occurs
- advanced premium company: premium is paid at start of policy, money left over
is refunded after insurer adjusts for cost of business
3 incompetent applicant possibilities for a contract
