Life and Health

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  1. What is a legal contract?
    A legal agreement between an insurer and the insured/applicant
  2. What is risk pooling?
    Risk pooling combines similar loss from many people to predict future losses
  3. What is the law of large numbers?
    The law of large numbers states that the larger the group the easier it is to predict future losses
  4. What is risk?
    Risk is the possibility of loss occuring
  5. What is personal risk?
    Risks that jeopardize an individuals greats assest, his earning power
  6. What is a peril?
    Peril is the cause of loss
  7. What is indemnity?
    Indemnity is to "make whole again". Insurance policies agree to provide payment of benefits to restore the insured's economic loss
  8. What are commercial insurers?
    Commercial insurers sell insurance to make profit
  9. What are stock companies?
    Stock companies are owned by it's stock holders who pay dividens from comapany profits
  10. What are mutual companies?
    Mutual comapanies are commercial insueres owned by policyowners
  11. What are noncommercial organizations?
    Noncommercial organizations are entities offering strict health coverage paid directly to health providers. Most common are blue cross which pays for hospital expenses and blue shield which pays for medical expenses
  12. U.S. vs South Eastern Underwriters Association
    Transactions crossing state lines are interstate commerce and are subject ot federal regulation
  13. McCarran Ferguson Act
    Federal government may not exercise rights if the insurance indutry is effectively and adequately regulated on the state level
  14. Fair Credit Reporting Act
    Regulates the way consumer credit reporing agencies collect and use an applicant's personal credit information
  15. Gramm-Leach Blily Act
    Allows financial entities to merge and accommodate greater competition
  16. National Association of Insurance Commissioners (NAIC)
    Promotes standardization of laws between states
  17. Agreement (Offer and Acceptance)
    An offer is made when an applicant submits an application to the insurer. The offer is accepted after it has been approved by an underwriter
  18. Consideration
    Is an exchange of values between the insurer and the insured
  19. Contract Adhesions
    Where the insurer has no say in the terms and conditions of the contract
  20. Aleatory Contract
    An unequal exchange, where one party contributes more than the other
  21. Warranties
    Statements that are guaranteed to be true and are apart of the legal contract
  22. Waiver and Estoppel
    • Waiver is surrendering a known right.
    • Estoppel is the legal process of preventing one party from reclaiming a right that was waived
  23. Rescission
    Contract may be voided if one or more parties to the contract commit material misrepresentation or concealment
  24. Subrogation
    The right of the insurer to assume the rights of the insured and sue the responsible thirt party for damages
  25. Net single premium
    Mortality and interest
  26. Gross single premium
    net premium with loading
  27. Gross anual premium
    Net premium with loading for one year
  28. What are the three main parts of a contract?
    • 1. Gereral information
    • 2. Medical information
    • 3. Agent's statement
  29. Multiple Employer Trust (MET)
    Where multiple employers form a trust fund to reduce the tax effects on providing employee benefits
  30. Multiple Employer Welfare Arrangement (MEWA)
    METs and MEWA are used synonmously
  31. Incontestability Clause
    The policy is incontestable after being in force for at least two years
  32. Insurance Superintendent
    • - Licensing and regulation
    • - May suspend or revoke licenses
    • - May issue cease and desist orders
    • - Conducts examinations of all domestic insurers at least once every five years
Card Set
Life and Health
Card for the life and health insurance exam
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