XCEL LIFE, HEALTH, & ACCIDENT INSURANCE: Chapter 1 Questions and Answers 100% Correct

XCEL LIFE, HEALTH, & ACCIDENT INSURANCE: Chapter 1 Questions and Answers 100% Correct Role of Insurance - Correct Answer ✔️✔️-To transfer the risk of financial lo ss from an individual or business to an insurance company Life Insurance - Correct Answer ✔️✔️-It is designed to protect against the risk of premature death. Health Insurance - Correct Answer ✔️✔️-It is designed to protect against the severity of financial loss due to illness, disease, short - or long -term disability, wages lost while ill or disabled, and medical expenses. Annuities - Correct Answer ✔️✔️-A contract which protects against the risk or living longer than expected. Annuities provide a guaranteed life income to protect against the risk of depleting retirement funds. Private Insurance - Correct Answer ✔️✔️-Insurance which offers coverage to people through the individual market. Funded through premiums to sell insurance Commercial Insurer - Correct Answer ✔️✔️-selling insurance for a profit. Two main groups: **stock insurers* **mutual insurers (Multi -line insurers)* Stock Companies - Nonparticipating - Correct Answer ✔️✔️-organized and incorporated under state laws for purpose of making a profit for its stock holders and is not ran by policyholders (no $). Mutual Companies - Participating - Correct Answer ✔️✔️-organiz ed and incorporated under state laws and policyholders receive dividends ($), but they have no stockholders. Anyone purchasing insurance is both a customer and an owner & has the right to vote for members of the board of directors. Mutualization - Correct Answer ✔️✔️-Stock company converting to a mutual company Demutualization - Correct Answer ✔️✔️-Mutual company converting to a stock company Lloyd's of London - Correct Answer ✔️✔️-Association formed to underwrite and issue insurance -like coverage on certai n items and areas that might otherwise be uninsurable Mixed Insurer - Correct Answer ✔️✔️-Insurance company that operates as both a participating and nonparticipating insurer. Dividends can never be guaranteed regardless of the type of company offering t hem. Reinsurers - Correct Answer ✔️✔️-The insurer that accepts the additional risk. Ceding Company - Correct Answer ✔️✔️-The insurer that gives the risk to the reinsurer. Also termed primary insurer. Home Service Insurers - Correct Answer ✔️✔️-sold by home service or debt life insurance companies. Face amounts are small; usually $1000 to $2000 and premiums are paid weekly