Life insurance ch 1
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- Risk - uncertainty or chance of loss
- speculative Risk- gambling
- Pure Risk- subject of insurance
- Retaining risk - a deductible self insuring
- transferring risk - insurance
What is Adverse Selection ?
Tendency of poor risk to buy insurance
Define Law of Large numbers:
companies can accurately predict what will happen to large groups of similar risk
- mutual - no stockholders, run for the benefit of the policy owners and considered a return of overcharge and as such are not taxable. Also known as participating companies.
- Stock- run for benefit of stockholders, company profits provides dividens to the stockholders, a taxable event. also known as nonparticipating companies.
- domestic- in state
- foreign- another state territrial or DC
- alien- another contry
- admitted- a company authorized to do business in this state
- non admitted- a company foreign or alien not authorized to do business in this state.
What is an insurance policy?
The company's consideration is the promise to do what?
promise to pay in the future.
A policyowners consideration is?
payment of the initial premium and the statements made on the application.
What is and an offer and acceptance?
offer is typically made by the applicant and the acceptance is made by the insurance company.
If the proposed insured is not acceptable to the company for the policy applied for he may be rejected or the company may make a _________ which may result in higher premium or less favorable benefits, or both.
In order to purchase insurance what must someone have ?
A beneficiary .....
need not to have insurable interest in an insured
an insurance policy is a contract of what?
Adhesion. They wrote it they are stuck with it.
What would you like to do?
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