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Massachusetts Life and Health Insurance Exam Already Passed
Typology: Exams
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Insurance ✔✔Transfer of Risk
Risk ✔✔Uncertainty/ Possibility of Loss
Exposure ✔✔Risks for which the insurance company would be liable
Peril ✔✔Cause of Loss
Hazard ✔✔Something that causes an increase in the chance of loss
Physical Hazard ✔✔Hazard that can be seen
Moral Hazard ✔✔A belief that intentionally causing a loss is acceptable
Morale Hazard ✔✔Carelessness
STARR ✔✔Method of handling risk
S- Method of handling risks ✔✔Sharing
T- Method of handling risk ✔✔Transfer
A- Method of handling risk ✔✔Avoidance
R- Method of handling risk ✔✔Retention
R- Method of handling risk ✔✔Reduction
Contract Policy ✔✔An agreement between the insured and the insurer
Law of Large Numbers ✔✔The larger the group, the more accurate losses can be predicted
Facultative Reinsurance ✔✔the reinsurer evaluates each risk before allowing the transfer
Treaty Reinsurance ✔✔the reinsurer accepts the transfer according to an agreement called a treaty
Stock Insurer ✔✔An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders.- Issues Non Par Policies
Mutual Insurer ✔✔An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them.- Non Taxable dividends & Participating Polcies
Fraternal Insurer ✔✔provides insurance and other benefits
must be a member of the society to get the benefits
Reciprocal Insurers ✔✔unincorporated groups of people that provide insurance for one another through individual indemnity agreements
Llyod's Associations ✔✔Organizations that provide support facilities for underwriters or groups of individuals that accept insurance risk.
Risk Retention Group ✔✔A liability insurance company owned by its members, which are exposed to similar liability risks by virtue of being in the same business or industry.
Risk Purchasing Groups ✔✔Groups of people with similar insurance needs who form an organization to buy insurance as a group.
Self-insurance ✔✔a business that pays its own claims
Residual Market ✔✔insurance from the state or federal government
Insurance Company Locations ✔✔Domestic, Foreign, and Alien
Certificate of Authority ✔✔state license for an insurance company
Fiduciary Trust ✔✔- Promptly sends premiums to insurer
Legal Contract ✔✔Consideration, Legal Purpose, Offer (Made by Insured), Acceptance, Competent Parties
Adhesion ✔✔Policy written by the insurance company
aleatory ✔✔not equal value - small premium for a large amount of coverage
Utmost Good Faith ✔✔An obligation to act in complete honesty and to disclose all relevant facts.
indemnity ✔✔pay for the loss but with no gain
representation ✔✔believed to be true
Misrepresentation ✔✔information that is not true, but would not affect the insurance company decision
Material Misrepresentation ✔✔- a false statement that changes the outcome of issuing a policy
warranty ✔✔guaranteed to be true
concealment ✔✔failure to disclose known facts
fraud ✔✔intentional act to cheat another
waiver ✔✔voluntary giving up of a right
estoppel ✔✔actions reasonably relied on by one party cant be denied by the party that accepted the same previously
Underwriting Sources of Information ✔✔application, medical exams, physicians statement, AIDS Testing, Medical Information Buereau, Consumer Reports, Investigative Reports
Classification of Risks ✔✔Standard, Preferred, Substandard, Declined
Agent Delivery ✔✔Usually must get signed delivery receipt
Statement of Good Health ✔✔Required if no premium with application, if health changed- agent can't deliver policy
Effective Date of coverage ✔✔- Terms of conditional receipt is issued
Fair Credit Reporting Act ✔✔Third Pary information, notice to applicant requiredm consumers have rights and can dispute information in files
STOLI/IOLI ✔✔Banned in most states
Investors named as beneficiaries
US Patriot Act ✔✔A U.S. federal act that broadens the surveillance of law enforcement agencies to enhance the detection and suppression of terrorism
ERISA ✔✔Act that allows employers to set up insurance plans. Also allows funding for Medicaid
Insurable Interest ✔✔Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.- must be proven before policy can be purchased
Personal Uses of Life Insurance ✔✔-survivor protection
-mortgage payoff
-estate creation
-estate conservation
-liquidity
-cash accumulation
Gross Premium ✔✔Net Premium plus expenses, gross annual
Premium Mode ✔✔Annual, semi - annual, quarterly, monthly
-annual is the lowest
Level Term Insurance ✔✔Death benefit is level, premium level for the term
Decreasing Term ✔✔Death benefit decreases, premium remains level
Increasing Term ✔✔-death benefit increases
-premium increases
Term features ✔✔renewable (No new application required, new preium based upon attained age
Term- Convertible ✔✔Can be changed to permanent insurance, no new application required
Traditional Whole Life ✔✔Fixed Premium, Fixed & level death benefit, Cash Values *Guaranteed interest, may be surrendered, may be borrowed, endows at 100
*Death Benefit- Amount at risk to the company, plus cash values
Continuous Premium Whole Life ✔✔most common type of whole life insurance; stretch premium payments over the whole life of the insured up to age 100
limited-payment life insurance ✔✔requires the payment of premiums for a limited time for a lifetime protection// at the end of the term does not pay any more premiums, but has lifetime protection
Single Premium Whole Life ✔✔Paid up for life with one large premium payment
Modified Premium Whole Life policy ✔✔Same as WL but premium low for 1st 3-5 yrs., THEN has one-time premium increase- levels off afterwards
Graded Premium Whole Life ✔✔Lower premiums for designated timeframe (typically 5- years); payments rise annually thereafter until leveling off
Joint Life ✔✔First to die, second to die (Survivorship Life)
Waiver of Premium Rider ✔✔Optional rider that requires an insurer to assume payment of premiums should the insured become totally disabled for six months for the duration of the disability.
Waiver of Cost of Insurance ✔✔A rider that waives the deduction of the monthly cost of insurance and expense charges associated with a Universal Life type policy while the insured is totally disabled, usually after 6 months of continuous disability.
Disability Income Rider ✔✔-Pays a monthly income benefit to the insured in the event he or she becomes disabled
-Pays benefits for life or until a disability ends once a waiting period has passed from the date of the insured's disability
Payor Rider ✔✔When an adult insures a child, premiums will be waived until the child reaches 21, if the adult dies or is disabled
Return of Premium Rider ✔✔- increasing term insurance rider
Accidental death rider ✔✔death due to accident that must have occured within 90 days of accident, doubles or tripled the face value
accidental death or dismemberment rider ✔✔amount of rider is the principal sum, paid in addition to face amount if death is due to accident, death within 90 days of accident
Guaranteed Insurability Rider ✔✔Optional rider that enables the policyowner to purchase additional amounts of coverage at predetermined times without proof of insurability.
Accelerated Benefit Rider ✔✔A living benefit or terminal illness rider
Life Income Settlement Option ✔✔A settlement option providing for life insurance that provided income to beneficiaries based upon life expectancy
Life Income Period Certain ✔✔Payments are guaranteed for the lifetime of the recipient or a specified period of time, whichever is longer.
Life Income - Refund ✔✔pays beneficiaries income for life, guaranteed payment will be at least equal to death benefit
Joint and survivorship ✔✔Pays two beneficiaries an income for life
Access to Cash Values While Insured is Living ✔✔loan reduced death benefits, if interest if not paid, loan automatically taken to pay interest,
Dividend Options- Carppo ✔✔-Cash
-Reduce premium
-Accumulate at interest
-Paid-up additions
-Purchase one year term
Reduced Paid-Up Insurance ✔✔Nonforfeiture option where cash value is used to make a single premium payment to purchase as much of the same type of insurance as possible. Face amount of the new policy would be less than the original policy but no further premium payments would be necessary. Policy can be reinstated.
Extended Term Insurance ✔✔Cash values buy single premium term insurance, same amount of insurance as old policy default option by insurer*
Free Look Provision ✔✔Generally 10 days after policy delivery to cancel policy w/ full refund, except 30 days for seniors or for replacement policies.
Insuring clause or agreement ✔✔- usually found on the first page of the policy.
