Wisconsin Life Insurance Course Questions & Answers
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Course
Wisconsin Life Insurance Course
Institution
Wisconsin Life Insurance Course
Wisconsin Life Insurance Course
Stock Companies - Answer- -private organization focused to make profits for shareholders
-Stock dividends are paid to stock holders
-policyholders do not participate
Mutual Companies - Answer- -have no stock holders
-owners are policy owners
-policy holders...
Wisconsin Life Insurance Course
Stock Companies - Answer- -private organization focused to make profits for
shareholders
-Stock dividends are paid to stock holders
-policyholders do not participate
Mutual Companies - Answer- -have no stock holders
-owners are policy owners
-policy holders can vote for members of the board
-policy owners receive dividends
Lloyd's of London - Answer- -A syndicate of individuals who underwrite insurance
Reinsurers - Answer- -are a specialized branch of the insurance industry because
they insure insurers
-reinsure risk to lessen it if a large claim would be made
1945 McCarren-Ferguson Act - Answer- Insurance would be regulated by the states
but would conform to federal anti trust laws
1970 Fair Credit Reporting Act - Answer- which is the authority that requires fair and
accurate reporting of information about consumers, including applicaitons for
insurance. Insurers must inform applicants about any investigations that are being
made
NAIC - Answer- All State insurance commisioners or directos are members
Broad objectives
1. To encourage uniformity in state insurance laws and regulations
2. To assist in the administration of those laws and regulations by promoting
efficiency
3. To protect the interest of policy owners and consumers
4. To preserve state regulations of the insurance business
State Guaranty Association - Answer- -state established guaranty funds or guaranty
associations to support insurers and protect consumers
-should an insurer be unable to pay its claims the association will step in and cover
the consumers unpaid claims
AM Best - Answer- A+
Standard and Poors or Moodys - Answer- AA-
Fitch - Answer- A1
Law of Large Numbers - Answer- This law states that larger groups provide an
increased degree of accuracy in loss predictions, based on past experience.
,Speculative Risk - Answer- is a risk that presents the chance for loss and a gain
ex. Gambling
Pure Risk - Answer- are the only insurable risks and present a potential for loss only
with no possibility of gain
ex. death
Avoidance - Answer- elimination of the hazard
Reduction - Answer- minimizing the severity of a potential loss
Retention - Answer- self insure, used when losses are highly predictable and the
worst loss is not serious
Transference - Answer- Buying insurance is the best way to transfer risk
Moral Hazards - Answer- dishonesty, drugs, alcohol abuse
Morale Hazards - Answer- careless attitude
Elements of Insurable Risk - Answer- loss must be
-due to chance
-definite and measurable
-predictable
-cannot be catastrophic
-exposure to be insured must be large
-loss must be randomly selected
Offer and acceptance - Answer- a definite, unqualified proposal which can be
accepted but if a counter offer is made then the first offer is void
Legal Purpose - Answer- the reason the parties enter into the agreement must be
legal
Competent Parties - Answer- the insurer must be licensed or authorized while the
insured is presumed competent with three exceptions
-Minor
-The mentally infirm
-Those under the influence of alcohol or drugs
Aleatory - Answer- unequal exchange of value or consideration for both parties
Adhesion - Answer- Insurance contracts are contracts of adhesion. This means that
the contract has been prepared by one party with no negotiation between the
applicant and insurer. In effect, the applicant "adheres" to the terms of the contract
on a take it or leave it basis when accepted. Any confusing language of the contract
would be interpreted in favor of the insured. A policy would also be considered this it
the insurance company could modify
, Unilateral - Answer- This means that only on party (the insurer) makes any kind of
enforceable promise
-applicant does not promise to pay premiums but insurer can cancel contract if they
are not paid
personal contract - Answer- Life insurance is a personal agreement or contract
between the insurer and the insured. The owner has no bearing on the risk that the
insurer has assumed. Policy owners can give their policies away if they wish
Conditional - Answer- This means the insurer's promise to pay benefits depends on
the occurrence of an event covered by the contract. If the event does not materialize,
no benefits are paid. If the premiums are not paid the condition for keeping the
contract in force no longer exists and the companies obligation to pay is relieved
value or indemnity - Answer- a valued contract pays a stated sum regardless of the
actual loss incurred. These tende to be life insurance contracts. An indemnity
contract is one that pays an amount equal to the loss. These tend to be fire and
health
Utmost good faith - Answer- Insurance applicants are required to make a fll, fair and
honest disclosure of the risk to the agent and insurer. Both parties must know all
material facts and information
Warranty - Answer- a statement made by the applicant that is guaranteed to be true
in every respect. Warrenties are presumed material
Representation - Answer- a statement made by the applicant that they consider to be
true and accurate to the best of the applicants belief. A false statement is considered
a material misrepresentation
Concealment - Answer- failure by the applicant to disclose a known material fact
when applying for insurance. If discovered the insurer has the option to void contract
but after a period of two years the contract can no longer be voidable for these
reasons
Insurable Interest - Answer- This means that the person acquiring the contract must
be subject to loss upon the death, illness, or disability of the person being insured.
To have " an insurable interest" in the life of another person, an individual must have
a reasonable expectation of benefiting from the other person continued life
Express Authority - Answer- is the authority a principal deliberately gives to its agent
Implied Authority - Answer- is the written authority that is not expressly granted but
which the agent is assumed to have in order to transact the business of the principal
Apparent Authority - Answer- is the appearance or assumptions of authority based
on the actions, words or deeds of the principal. It can also exist because of
circumstances the principal created
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