question

Insurer

answer

Insurance company or carrier

question

Insured

answer

Person whom insurance is written and rated

question

Policy owner

answer

Person with ownership and rights but not necessarily the insured

question

Beneficiary

answer

Person designsted to receive death benefits in a life or health policy

question

Principle of Indemnity

answer

States the insured will be restored to the same financial condition as before the loss. Insured can not profit from insurance payout.

question

Insurability

answer

Acceptability of an applicant for an insurance policy from an insurer at a given rate

question

Underwriting

answer

Process of classifying a risk for the purpose of issuing insurance coverage

question

Insurance Interest

answer

Principle the requires the insured to suffer financially in the event of a loss in order to obtain insurane and collect payment. Must exist at time of Application.

question

Cancellation

answer

Discontinuation of a policy at the end of the policy term.

question

Rider

answer

Endorsement; policy form used to revise coverage in an in-force life or health policy.

question

Exclusion

answer

Cause of loss; condition or situation not covered by the policy.

question

Commissioner of Insurance

answer

Appointed by Governor to be the Dept of Insurance's Chief exec and admin officer.

question

Reinsurance Reserves

answer

Required fund set by the insurer for the protection of its policyholders for paying off for example claims, outstanding balances, etc.

question

Admitted insurer

answer

Insurer that sought permission from the commissioner of ins and been granted auhority to sell insurance in Texas.

question

Certificate of Authority

answer

License for insurer; shows that the insurer is approved to sell insurance in the State.

question

Sanctions and Penalties

answer

Fails to meet admission requirements or breaks the rules of state, commission may suspend or revoke Cert of Authority.

question

Non-Admitted Insurer

answer

Insurer not licensed to sell insurance is Texas.

question

Surplus Lines

answer

Non-admitted insurance when insurers will not accept the insured.

question

Domicile of insurer

answer

Jurisdiction under which company is formed, incorporated or has home office: 1. Domestic-formed in Texas 2. Foreign-different State 3. Alien- Different Country

question

Examination of records

answer

Every 5 years, Dept of Insurance will examine the books and records to determine financial stability.

question

Stock Insurer

answer

A stock insurer is owned by its policy holders. Have Board of directors elected for guidance. Taxable dividends.

question

Mutual Insurer

answer

Mutual insurer is owned by policyholders. Guided by elected Board of Directors with nontaxable dividends as refund of unused premiums.

question

Fraternal Benefit Society(type of insurer)

answer

Provides insurance only to their members in the organization.

question

Reinsurance Company( type of insurer)

answer

A reinsuer asumes part of or all risk from primary insurer as method of risk sharing.

question

Lloyds of Texas(type of insurer)

answer

Companies that consist of at least 10 underwriters and an attorney-in-fact to provide property and casualty insurance. Underwriters called Syndicates liable for risks they assume.

question

Transacting Insurance

answer

Collects Premium, issues policy and proposals, recieves application, acts as producer, making phone calls and setting up appointments.

question

Advertising Insurance

answer

For an advertisement to be legal ad must use full corporate name in any form.

question

License type: Agent

answer

Standard type of license. Passed exam within 12 months at least 18 yrs old etc

question

License type: Temporary Agent

answer

Temp license issued to those being considered for appointment by agent or insurer. 90 days validity.

question

License type: Nonresident Agent

answer

Resident of another State wanting to sell insurance in Texas if state has Reciprocal Licensing Agreement with Texas.

question

License Type: Limited Lines Agent

answer

Can only and exclusively sell specific or limited types of insurance like credit life, state minimum auto, prepaid legal services or residential fire.

question

License type: Emergency License

answer

Issued without taking exam in event agent dies becomes disable or becomes insolvent. Valid 90 days per 12 month period.

question

License type: Managing General Agent

answer

MGA required for an individual who supervises the field operations of the insirer they represent and have underwriting authority granted.

question

License type: Life and Health Insurance Counselor

answer

License issued to a person who is available to the public to examine and evaluate risks for a person obtaining life or health insurance.

question

Appointment

answer

Person wishing to sell insurance having an insurance license and an appointment form from an insurer selling policies in Texas

question

Continuing education

answer

License expires after 24 months and must complete continuing education classes of 30 hours and 2 of the hours must include ethics.

question

Agent responsibilities

answer

Position between insurer and insured where they represent both but technically only represent insurer aka the company.

question

Boycott Coercion Intimidation

answer

Deliberate and forceful actions intended to unreasonably restrain individual from an individual or organization.

question

Controlled business

answer

Selling only to friends family or employer

question

Defamation

answer

Any written or spoken statement about a person or organization that is both false and maliciously critical of a person or company with intent to injure

question

Discrimination

answer

Unfair or illegal treatment of or denial right to a person purely on the arbitrary basis of characteristics such as age race gender religion marital sexual orientation or origin

question

False Advertising

answer

Publicly made statement that is deceptive or untrue or aimed to mislead the public about a person working in insurance or about the industry itself.

question

Rebating

answer

Offering anything of value or returning or offering to return a portion of premium or commission to an applicant to induce the purchase of insurance from that agent. Nothing can be given as a thank you other than the policy itself *

question

Commission sharing

answer

Two agents who have the same license type where one friend referred a customer to the other and are not appointed by the same company.

question

Twisting

answer

Inducing or attempting to induce a policy owner to drop an existing policy to take another policy that is substantially the same by using misinterpretations or incomplete comparisons of the advantages and disadvantages of the two policies.

question

Unfair claim settlement practices

answer

Unfair practices according to Chapters 541 and 542 of Texas Insurance Code

question

Fair Credit Reporting Act

answer

Intended to promote fairness accuracy and protection of private information contained in consumer reports such as credit report. Applicant must be notified at time of application.

question

USA Patriot Act

answer

Financial Anti Terrorism- imposed record keeping and reporting requirements on financial Institutions including insurers to aid in monitoring laundered money for drug trafficking or money being used to finance terrorism.

question

Financial Services Modernization Act

answer

Gramm Leach Billet Act of 1999 to eliminate Depression era restrictions on financial institutions such as banks securities companies and insurers. Helped prohibit monopolies barring some companies from merging.

question

Disciplining a license

answer

If any of the unfair Business practices or Claims Practices under chptrs 541;542 are committed the department may discipline an individual license.

question

Risk

answer

Uncertainty concerning the potential for a loss

question

Speculative risk

answer

Circumstances provide the opportunity for loss or gain or neither(uninsurable)

question

Pure risk

answer

Circumstances provide the opportunity for loss but no opportunity for gain.

question

Loss

answer

Reduction or elimination of value and forms the basis of claim for damages in insurance.

question

Peril

answer

Cause of a loss

question

Hazard

answer

Situation that makes a loss more likely

question

Physical Hazard

answer

Physical or tangible circumstances that increase potential for a loss

question

Moral Hazard

answer

Measured by character of the insured and he potential gain to the insured in case of loss

question

Morale Hazard

answer

Indifference or carelessness that increases he probability of a loss

question

Transfer

answer

shifting the burden of the risk onto another party

question

Avoid

answer

Elimination of the risk

question

Reduce

answer

Minimizing the risk but not eliminating it.

question

Retain

answer

Self insuring meaning not carrying insurance for the risk.

question

Legal purpose

answer

Contract can only be entered for a legal purpose.

question

Competent parties

answer

Each party to the contract must have the legal capacity to enter the contact.

question

Agreement

answer

One party must make an offer to the other which must be accepted, forming an agreement.

question

Offer

answer

The applicant submitting the application and the initial premium

question

Acceptance

answer

Insurers issuance of a policy

question

Consideration

answer

Exchange of values by bother parties. Premium payment and promise to pay 4Ps

question

Contract of Adhesion

answer

Contract offered to the first party(insured) by the insurer requiring the insured to accept or reject contract in total without having the opportunity to negotiate

question

Unilateral contract

answer

An agreement where only one party makes a promise of future performance

question

Conditional contract

answer

An agreement where both parties to the contract fulfill certain conditions to keep contract enforceable.

question

Representation

answer

Statement made by applicant in the application that is believed to be true to the best of applicants knowledge.

question

Warranty

answer

Statement made by applicant or a stipulation in the policy that guarantees something is true in all aspects. Can warrant name Ssn address etc

question

Misrepresentation

answer

False statement made by an applicant in the application or claim form.

question

Concealment

answer

Deliberate withholding or hiding information important to issuing the policy.

question

Fraud

answer

Deception to take advantage of someone or something.

question

Waiver

answer

The surrender of a right or privilege

question

Death benefit

answer

Amount of coverage payable on the policy, sometimes called face amount.

question

Cash value

answer

Amount of money accumulated within certain types of life insurance which policy owner may take loan or revive money by cancelling.

question

Estate

answer

Sum of all assets minus any debts of a person at the time of their death.

question

Waiting period

answer

Period of time person must wait before becoming eligible for benefits.

question

Elimination period

answer

The period of time that must expire before disability benefits are paid.

question

Policy goes into effect when

answer

Premium payment is made

question

Trial application

answer

Application with nonpayment.

question

Binding receipt

answer

Unconditional; coverage begins immediately last until approval or denial..

question

Conditional receipt

answer

Temporary coverage wth conditions.

question

Guaranteed purchase option

answer

Rider in a disability income policy allows the insured to purchase additional monthly benefits at specific ages without providing proof of good health.

question

HRA

answer

100% employee funded

question

Credit life

answer

Insurance on the life of the debtor.

question

Key person policy

answer

Employer is owner, premium payor and usually the beneficiary

question

Incontestability clause

answer

Cannot contest a claim after 2 years

question

Producer of insurer

answer

Can not sign or request change in an insurance contract

question

Uniform simultaneous death law

answer

Insured or primary beneficiary died first that the primary bene is presumed to have predeseased the insured and the funds go to the insured'S contingent

question

Automatic premium loan

answer

Make sure policy doesn't lapse for non payment premium

Insurance School of Texas – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards