OHIO Life Insurance Exam
Perils: - ✔️✔️The causes of loss insured against in an insurance policy.
-Life insurance
-Health insurance
-Property insurance
-Casualty insurance
Direct response marketing: - ✔️✔️A direct response marketing system effectively
bypasses the insurance agent. Business is conducted over the phone, through the mail,
or online. This is a perfectly legal approach to selling insurance. It is not mandatory in all
situations for the insured to physically sign any documents in order for coverage to go
into effect.
Insurance: - ✔️✔️A contract in which the insurance company agrees to indemnify the
insured party against loss, damage or liability arising from an unknown event.
Insurance Transfers: - ✔️✔️The risk of loss from an individual or business entity to an
insurance company, which in turn spreads costs of unexpected losses to many
individuals.
Insurance Transaction: (4) - ✔️✔️Solicitation, Negotiations, Sale (effectuation of a
contract of insurance, and Advising an individual concerning coverage of claims.
Risk: (Two Types) - ✔️✔️The uncertainty or chance of a loss occurring.
Pure Risk:
-Situations that can only result in a loss or no change. There is no opportunity for
financial gain. This is the only type that insurance companies will accept.
Speculative Risk:
-Involves the opportunity for either loss or gain. Ex: Risk of gambling. These are not
insurable risks.
Concealment: - ✔️✔️The withholding of information that will result in an imprecise
underwriting decision.
Exposure: - ✔️✔️A unit of measure used to determine rates charged for insurance
coverage.
EX of Life insurance factors:
,-Age, medical history, occupation, and sex.
Homogenous: - ✔️✔️A large number of units having the same or similar exposure to
loss.
Hazards: (3 types) - ✔️✔️Conditions or situations that increase the probability of an
insured loss occurring.
Physical hazards:
-Individual characteristics that increase the chances of the cause of loss. Ex: past
medical history, condition at birth (blindness).
Moral Hazards:
-Tendencies towards increased risk. Involves evaluating the character and reputation of
a proposed insured. Ex: When an applicant lies on the application for insurance.
Morale Hazards:
-Arise from a state of mind that causes indifference to loss, such as carelessness. Ex:
Not spending money on a flu shot because if you get the flu your insurance company
will pay for it.
Loss: - ✔️✔️The reduction, decrease, or disappearance of the value of the person or
property insured in a policy, caused by a named peril.
Look at transfer stuff pg 7
Avoidance: (Method of handling risk) - ✔️✔️Eliminating exposure to a loss. Ex: If a
person wanted to avoid the risk of being killed in an airplane crash, he/she might
choose never to fly in an airplane. It is effective but not practical.
Risk Retention: (Method of handling risk) - ✔️✔️The planned assumption of risk by an
insured through the use of deductibles, copayments, or self-insurance.
Purpose of retention: (3 things) - ✔️✔️1) Reduce expenses and improve cashflow
2) Increase control of claim reserving and claims settlements
3)To fund for losses that cannot be insured
Sharing: (Method of handling risk) - ✔️✔️Method of dealing with risk for a group of
individuals or businesses with the same or similar exposure to loss to share the losses
that occur within that group.
Reduction: (Method of handling risk) - ✔️✔️Includes actions such as installing smoke
detectors in our homes, having an annual physical to detect health problems early, or
perhaps making a change in our lifestyles.
, Transfer: - ✔️✔️The most effective way to handle risk. Transfer it to another party.
Reinsurance: - ✔️✔️Is a contract which one insurance company indemnifies another
insurance company for part or all of its liabilities.
Nonparticipating policies: - ✔️✔️Does not pay dividends to policyowners, but taxable
dividends are paid to stock holders. Usually issued by stock companies
Participating policies: - ✔️✔️Pay dividends to policy owners based upon actual
mortality cost, interest earned and costs.
Risk Retention Group: - ✔️✔️A liability insurance company owned by its members.
Lloyd's Association: - ✔️✔️Provides support facilities for underwriters or groups of
individuals that accept insurance risk.
Surplus lines: - ✔️✔️Insurance for which there is no readily available admitted market.
They do not have a certificate of authority to transact business in the state, but are on
the Commissioner's approved list to transact business under the state's surplus lines
laws.
Offer: - ✔️✔️This is made when submitting the application
Acceptance: - ✔️✔️Takes place when an insurer's underwriter approves the
application and issues a policy.
Consideration: - ✔️✔️The binding force in any contract.
Competent Parties: - ✔️✔️The parties to a contract must be capable of entering into a
contract in the eyes of the law.
Legal Purpose: - ✔️✔️The purpose of the contract must be legal and not against public
policy.
Contract of adhesion: - ✔️✔️Is prepared by one of the parties and accepted or rejected
by the other party. Known as a take it or leave it contract
Aleatory Contract: - ✔️✔️There is an exchange of unequal amounts or values.
Personal Contract: - ✔️✔️A contract is personal because it is between the insurance
company and an individual.
Perils: - ✔️✔️The causes of loss insured against in an insurance policy.
-Life insurance
-Health insurance
-Property insurance
-Casualty insurance
Direct response marketing: - ✔️✔️A direct response marketing system effectively
bypasses the insurance agent. Business is conducted over the phone, through the mail,
or online. This is a perfectly legal approach to selling insurance. It is not mandatory in all
situations for the insured to physically sign any documents in order for coverage to go
into effect.
Insurance: - ✔️✔️A contract in which the insurance company agrees to indemnify the
insured party against loss, damage or liability arising from an unknown event.
Insurance Transfers: - ✔️✔️The risk of loss from an individual or business entity to an
insurance company, which in turn spreads costs of unexpected losses to many
individuals.
Insurance Transaction: (4) - ✔️✔️Solicitation, Negotiations, Sale (effectuation of a
contract of insurance, and Advising an individual concerning coverage of claims.
Risk: (Two Types) - ✔️✔️The uncertainty or chance of a loss occurring.
Pure Risk:
-Situations that can only result in a loss or no change. There is no opportunity for
financial gain. This is the only type that insurance companies will accept.
Speculative Risk:
-Involves the opportunity for either loss or gain. Ex: Risk of gambling. These are not
insurable risks.
Concealment: - ✔️✔️The withholding of information that will result in an imprecise
underwriting decision.
Exposure: - ✔️✔️A unit of measure used to determine rates charged for insurance
coverage.
EX of Life insurance factors:
,-Age, medical history, occupation, and sex.
Homogenous: - ✔️✔️A large number of units having the same or similar exposure to
loss.
Hazards: (3 types) - ✔️✔️Conditions or situations that increase the probability of an
insured loss occurring.
Physical hazards:
-Individual characteristics that increase the chances of the cause of loss. Ex: past
medical history, condition at birth (blindness).
Moral Hazards:
-Tendencies towards increased risk. Involves evaluating the character and reputation of
a proposed insured. Ex: When an applicant lies on the application for insurance.
Morale Hazards:
-Arise from a state of mind that causes indifference to loss, such as carelessness. Ex:
Not spending money on a flu shot because if you get the flu your insurance company
will pay for it.
Loss: - ✔️✔️The reduction, decrease, or disappearance of the value of the person or
property insured in a policy, caused by a named peril.
Look at transfer stuff pg 7
Avoidance: (Method of handling risk) - ✔️✔️Eliminating exposure to a loss. Ex: If a
person wanted to avoid the risk of being killed in an airplane crash, he/she might
choose never to fly in an airplane. It is effective but not practical.
Risk Retention: (Method of handling risk) - ✔️✔️The planned assumption of risk by an
insured through the use of deductibles, copayments, or self-insurance.
Purpose of retention: (3 things) - ✔️✔️1) Reduce expenses and improve cashflow
2) Increase control of claim reserving and claims settlements
3)To fund for losses that cannot be insured
Sharing: (Method of handling risk) - ✔️✔️Method of dealing with risk for a group of
individuals or businesses with the same or similar exposure to loss to share the losses
that occur within that group.
Reduction: (Method of handling risk) - ✔️✔️Includes actions such as installing smoke
detectors in our homes, having an annual physical to detect health problems early, or
perhaps making a change in our lifestyles.
, Transfer: - ✔️✔️The most effective way to handle risk. Transfer it to another party.
Reinsurance: - ✔️✔️Is a contract which one insurance company indemnifies another
insurance company for part or all of its liabilities.
Nonparticipating policies: - ✔️✔️Does not pay dividends to policyowners, but taxable
dividends are paid to stock holders. Usually issued by stock companies
Participating policies: - ✔️✔️Pay dividends to policy owners based upon actual
mortality cost, interest earned and costs.
Risk Retention Group: - ✔️✔️A liability insurance company owned by its members.
Lloyd's Association: - ✔️✔️Provides support facilities for underwriters or groups of
individuals that accept insurance risk.
Surplus lines: - ✔️✔️Insurance for which there is no readily available admitted market.
They do not have a certificate of authority to transact business in the state, but are on
the Commissioner's approved list to transact business under the state's surplus lines
laws.
Offer: - ✔️✔️This is made when submitting the application
Acceptance: - ✔️✔️Takes place when an insurer's underwriter approves the
application and issues a policy.
Consideration: - ✔️✔️The binding force in any contract.
Competent Parties: - ✔️✔️The parties to a contract must be capable of entering into a
contract in the eyes of the law.
Legal Purpose: - ✔️✔️The purpose of the contract must be legal and not against public
policy.
Contract of adhesion: - ✔️✔️Is prepared by one of the parties and accepted or rejected
by the other party. Known as a take it or leave it contract
Aleatory Contract: - ✔️✔️There is an exchange of unequal amounts or values.
Personal Contract: - ✔️✔️A contract is personal because it is between the insurance
company and an individual.
