Home > Flashcards > Print Preview
The flashcards below were created by user
on FreezingBlue Flashcards. What would you like to do?
What is Insurance?
A contract that Indemnifies another against lost, damage, or liability arising from an unknown event.
What is Indemnify?
to make a person whole by restoring that person to the same financial position that existed before the loss.
What are the types of Risk and what are they?
- Pure Risk: means that there is only a chance of loss- the loss may or may not happen-and there is no possibility of gain. Only pure risk is insurable
- Speculative Risk: involves both an uncertainty of loss and of gain. Insurance does not protect individuals against losses arising out of speculative risk because these risks are undertaken voluntarily.
What is Peril?
is the immediate specific event causing loss and giving rise to risk, the cause of risk
What is Hazard?
is any factor that gives rise to a peril, three types physical, Moral, and Morale
arise from material, structural, or operation features of a risk situation
Arise from people's habits and values
arise out of human carelessness or irresponsibility.
What is STARR?
risk management strategy, Sharing, Transfer, Avoidance, Reduction, Retention
Law of Large Numbers
Allows the insurance company to turn a profit by maintaining a large number of clients. This allows them to predict how many losses may occur within a large group.
Types of Insurances
- 1.Property insurance
- 2.Casualty Insurance
- 3. Annuity
- 4.Life Insurance, Accident and Health or sickness
- 5.Variable Life
- 6.variable Annuity products
- 7. Credit
protects the Insured against the financial consequences of the direct or consequential loss or damage to property
protects the insured against financial consequences of legal liability, including that for death, injury, disability, or damage to or personal property
provides guaranteed income for the life of an annuitant
Accident and health or sickness
Insurance protects the insured against financial loss caused by sickness, bodily injury, or accidental death and may include diability
Variable Life and Variable Annuity products
variable products carry investment risk, that is the insured may lose money because of a decrease in the price of a securities underlying the policy
a limited line of insurance protecting the insured, who is usually a creditor
types of insurers
- 1. Stock Insurers
- a. a stock insurance company consists of stock holders also kown as shareholders
- 2. Mutual Insurers
- a. ownship rests with the policyholders, also known as policyowners. Funds not paid after paying claims and operating costs are returned to policyowners
- 3. Reciprocal insurers
- a. are unincorporated groups of people that provide insurance for one another through individual indemnity agreements
- 4. Fraternal Insurers
- a. primarily life insurance carriers that exist as social organ. and usually engage in charitable and benevolent activities. members are usually drawn from fraternal lodges.
- 5. Lloyd's of London
- a.provides a meeting place and clerical services to its members who actually transact the business of insurance.
- 6. Reinsurers
- a. make up a specialized branch of the insurance industry that insure insurers.
- 7. Excess and Surplus Lines
- a.insurance for items that contain to great a risk for usual compannies
- 8. Risk Retention Groups
- a. are composed of members who are engaged in similar business or activities.
- 9. Self-Insurers
- a. insuring ones own self or business by setting aside funds in case of an emergency
- 10. US GOV'T
- a. Fed gov't provides a variety of insurance benefits through various programs. Social security, etc.
types of Insurers Domicile
- Domestic Insurers
- - a company is a domestic insurer in the state in which it is incorporated
- Foreign Insurer
- - a foreign insurer is licensed to conduct business in states other than the one in which it is incorporated
- Alien Insurer
- - Companies incorporated in a country other than the United States