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Massachusetts Life and Health Insurance
Exam Study Guide.
Insurance - answer✔Transfer of Risk
Risk - answer✔Uncertainty/ Possibility of Loss
Exposure - answer✔Risks for which the insurance company would be liable
Peril - answer✔Cause of Loss
Hazard - answer✔Something that causes an increase in the chance of loss
Physical Hazard - answer✔Hazard that can be seen
Moral Hazard - answer✔A belief that intentionally causing a loss is acceptable
Morale Hazard - answer✔Carelessness
STARR - answer✔Method of handling risk
S- Method of handling risks - answer✔Sharing
T- Method of handling risk - answer✔Transfer
A- Method of handling risk - answer✔Avoidance
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R- Method of handling risk - answer✔Retention
R- Method of handling risk - answer✔Reduction
Contract Policy - answer✔An agreement between the insured and the insurer
Law of Large Numbers - answer✔The larger the group, the more accurate losses can be
predicted
CANHAM Risks - answer✔Can be insured with the following characteristics
C- CANHAM Risks - answer✔Calculable
A- CANHAM Risks - answer✔Affordable
N- CANHAM Risks - answer✔Non- Catastrophic
H- CANHAM Risks - answer✔Homogeneous
A- CANHAM Risks - answer✔Accidental
M- CANHAM Risks - answer✔Measurable
Adverse Selection - answer✔risks that have a greater than average chance of loss
Reinsurance- - answer✔An insurance company sells some of its risk to other insurance
companies.
Facultative Reinsurance - answer✔the reinsurer evaluates each risk before allowing the transfer
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Treaty Reinsurance - answer✔the reinsurer accepts the transfer according to an agreement called
a treaty
Stock Insurer - answer✔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 - answer✔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 - answer✔provides insurance and other benefits
must be a member of the society to get the benefits
Reciprocal Insurers - answer✔unincorporated groups of people that provide insurance for one
another through individual indemnity agreements
Llyod's Associations - answer✔Organizations that provide support facilities for underwriters or
groups of individuals that accept insurance risk.
Risk Retention Group - answer✔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 - answer✔Groups of people with similar insurance needs who form an
organization to buy insurance as a group.
Self-insurance - answer✔a business that pays its own claims
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Residual Market - answer✔insurance from the state or federal government
Insurance Company Locations - answer✔Domestic, Foreign, and Alien
Certificate of Authority - answer✔state license for an insurance company
Admitted or Authorized - answer✔state requires the insurance company to have a certificate of
authority
Non-admitted - answer✔unauthorized-insurance company not required to have a Certificate of
Authority from the state
Surplus Lines - answer✔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
Methods of Marketing - answer✔- Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
Agency - answer✔The insurance agent acts on behalf of principal (Insurance Company)
Agent Authority - answer✔express, implied, apparent
Fiduciary Trust - answer✔- Promptly sends premiums to insurer
- Has knowledge of products
Massachusetts Life and Health Insurance
Exam Study Guide.
Insurance - answer✔Transfer of Risk
Risk - answer✔Uncertainty/ Possibility of Loss
Exposure - answer✔Risks for which the insurance company would be liable
Peril - answer✔Cause of Loss
Hazard - answer✔Something that causes an increase in the chance of loss
Physical Hazard - answer✔Hazard that can be seen
Moral Hazard - answer✔A belief that intentionally causing a loss is acceptable
Morale Hazard - answer✔Carelessness
STARR - answer✔Method of handling risk
S- Method of handling risks - answer✔Sharing
T- Method of handling risk - answer✔Transfer
A- Method of handling risk - answer✔Avoidance
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R- Method of handling risk - answer✔Retention
R- Method of handling risk - answer✔Reduction
Contract Policy - answer✔An agreement between the insured and the insurer
Law of Large Numbers - answer✔The larger the group, the more accurate losses can be
predicted
CANHAM Risks - answer✔Can be insured with the following characteristics
C- CANHAM Risks - answer✔Calculable
A- CANHAM Risks - answer✔Affordable
N- CANHAM Risks - answer✔Non- Catastrophic
H- CANHAM Risks - answer✔Homogeneous
A- CANHAM Risks - answer✔Accidental
M- CANHAM Risks - answer✔Measurable
Adverse Selection - answer✔risks that have a greater than average chance of loss
Reinsurance- - answer✔An insurance company sells some of its risk to other insurance
companies.
Facultative Reinsurance - answer✔the reinsurer evaluates each risk before allowing the transfer
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Treaty Reinsurance - answer✔the reinsurer accepts the transfer according to an agreement called
a treaty
Stock Insurer - answer✔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 - answer✔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 - answer✔provides insurance and other benefits
must be a member of the society to get the benefits
Reciprocal Insurers - answer✔unincorporated groups of people that provide insurance for one
another through individual indemnity agreements
Llyod's Associations - answer✔Organizations that provide support facilities for underwriters or
groups of individuals that accept insurance risk.
Risk Retention Group - answer✔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 - answer✔Groups of people with similar insurance needs who form an
organization to buy insurance as a group.
Self-insurance - answer✔a business that pays its own claims
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Residual Market - answer✔insurance from the state or federal government
Insurance Company Locations - answer✔Domestic, Foreign, and Alien
Certificate of Authority - answer✔state license for an insurance company
Admitted or Authorized - answer✔state requires the insurance company to have a certificate of
authority
Non-admitted - answer✔unauthorized-insurance company not required to have a Certificate of
Authority from the state
Surplus Lines - answer✔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
Methods of Marketing - answer✔- Independent
- Exclusive or captive
- General agents or managing general agents
- direct writing companies
Agency - answer✔The insurance agent acts on behalf of principal (Insurance Company)
Agent Authority - answer✔express, implied, apparent
Fiduciary Trust - answer✔- Promptly sends premiums to insurer
- Has knowledge of products
