Massachusetts Life and Health
Insurance Exam
Material Misrepresentation - - a false statement that changes the outcome of issuing a policy
- generally with the health statement
Surplus Lines - any type of insurance for which there is no available market within the state, and
the coverage must be placed with a non admitted insurer
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
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
CANHAM Risks - Can be insured with the following characteristics
C- CANHAM Risks - Calculable
A- CANHAM Risks - Affordable
N- CANHAM Risks - Non- Catastrophic
H- CANHAM Risks - Homogeneous
A- CANHAM Risks - Accidental
,M- CANHAM Risks - Measurable
Adverse Selection - risks that have a greater than average chance of loss
Reinsurance- - An insurance company sells some of its risk to other insurance companies.
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
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
Admitted or Authorized - state requires the insurance company to have a certificate of authority
Non-admitted - unauthorized-insurance company not required to have a Certificate of Authority
from the state
Methods of Marketing - - Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
Agency - The insurance agent acts on behalf of principal (Insurance Company)
Agent Authority - express, implied, apparent
Fiduciary Trust - - Promptly sends premiums to insurer
- Has knowledge of products
- Complies with laws and regulations
- Does not commingle funds
Legal Contract - Consideration, Legal Purpose, Offer (Made by Insured), Acceptance, Competent
Parties
Adhesion - Policy written by the insurance company
Insurance Exam
Material Misrepresentation - - a false statement that changes the outcome of issuing a policy
- generally with the health statement
Surplus Lines - any type of insurance for which there is no available market within the state, and
the coverage must be placed with a non admitted insurer
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
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
CANHAM Risks - Can be insured with the following characteristics
C- CANHAM Risks - Calculable
A- CANHAM Risks - Affordable
N- CANHAM Risks - Non- Catastrophic
H- CANHAM Risks - Homogeneous
A- CANHAM Risks - Accidental
,M- CANHAM Risks - Measurable
Adverse Selection - risks that have a greater than average chance of loss
Reinsurance- - An insurance company sells some of its risk to other insurance companies.
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
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
Admitted or Authorized - state requires the insurance company to have a certificate of authority
Non-admitted - unauthorized-insurance company not required to have a Certificate of Authority
from the state
Methods of Marketing - - Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
Agency - The insurance agent acts on behalf of principal (Insurance Company)
Agent Authority - express, implied, apparent
Fiduciary Trust - - Promptly sends premiums to insurer
- Has knowledge of products
- Complies with laws and regulations
- Does not commingle funds
Legal Contract - Consideration, Legal Purpose, Offer (Made by Insured), Acceptance, Competent
Parties
Adhesion - Policy written by the insurance company
