Florida Insurance 2-14 Exam Terms / Verified
Questions with Correct Answers.
Terms in this set (350)
Insurance Financial protection against loss or harm - An arrangement
by which company gives customers financial protection
against loss or harm such as theft or illness in return for
premium payments.
Life Insurance Is based on actuarial or mathematical principles and
guarantees a specified sum of money upon the death of
the person who is insured.
Annuities Provide a stream of income by making a series of
payments to the annuitant for the annuitant's lifetime or
for a specifically designated period of time.
Risk Uncertainty regarding loss; the probability of loss occurring
for an insured or prospect
Speculative Risks Involve the possibility of loss and gain. (Not Insurable)
Pure Risks Involve the possibility of loss only. (Insurable)
Peril Cause of risk (when a building burns, fire is the peril)
Hazards The source of danger
Physical Hazard A hazard being of physical nature.
A person being treated of cancer, the disease is the physical
endangerment. (Blindness & deafness)
Occurs when individuals evade risk entirely. "If you don't
Risk Avoidance
drive, then you avoid getting in an auto accident."
Risk Reduction Takes place when the chances of loss are lessened.
Changing a lifestyle to minimize a known risk.
,Risk Retention Being aware of the risks involved and taking
precautions for financial protection. Auto policy's
deductible is an illustration of risk retention
Risk Transference The act of shifting the responsibility of risk to another in the
form of an insurance contract.
Adverse Selection Refers to the tendency for those individuals who present
less favorable insurance risk to seek or continue insurance
to a great extent than other risks.
Insuring Pure Risk Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Mutual Insurers Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Prohibited in Florida
Insurers
Pure Assessment Mutual Don't pay premium and total loss is divided among members
Company
Lloyds of London NOT considered an insurance company
- An association of individuals and companies that individually
underwriter insurance.
Fraternal Benefit Societies Must be nonprofit, have a lodge system, and offer insurance to its
members only
Insurer that offers relatively small policies with premiums
Home Service Insurer
payable on a weekly basis.
,Captive Agents A.k.a. Career agents
Works for only one insurer and sells only that insurers products
Independent Agents Is self-governing and actually works for himself. This affords him
the versatility to represent several insurers and their different
insurance products.
Special Agents Usually not license and don't sell insurance. Assist insurance
companies field representatives.
Career Agency System (GA) - Build sales staffs and agents are treated as
employees. They are recruited and trained. A principal of
the company supervises agents.
Personal Producing (PPGA) - The agent supplies his own working environment.
General Agency System Agents hired by a PPGA are considered employees of the
PPGA, not the insurance company, and are supervised by
the regional salary.
Independent Agency Agents represent several insurers through signed
System contracts and are paid on commission or fee basis, not
through salary.
Regulating the business of Legislation
insurance The Court System
State Insurance Departments
Paul v. Virginia - State tried to control insurance domiciled fromanother state.
- U.S. Supreme Court sided against insurancecompany
- Upholding the right of sate to regulate insurance
- States WIN
United States v. - Ruling is a form of interstate commerce
Southeastern - Should be regulated by the federal government
Underwriters Association - Fed Gov. WINS
(SEUA)
, The McCarran-Ferguson - Gave back some regulatory authority to the states
Act - Did not provide the states to regulate individually-
Insurance regulated by state law "is in the publics best
interest"
Intervention by SEC - Dealing with variable annuities
- Securities and Exchange Commission (SEC) shouldregulate
the variable annuities (since they're used for investments) &
variable life insurance.
- Therefore, agents must obey the rules to both SECand state
regulation.
Fair Credit Reporting Act - Fair and accurate report of information aboutconsumers
- Insurers must inform them about any investigationsbeing
made
- Then insurers must let the applicants know the nameof the
reporting agency
Financial Services - Revoking the Glass-Steagall Act
Modernization Act - This changed the industry so commercial banks,investment
banks, retail brokerages, and insurance companies can now
enter each other's lines of business
Admitted insurance - Office of Insurance Regulation has licensed them to carry out
company business in Florida
Nonadmitted Insurance - Have not been licensed by the the Florida Office of
Company Insurance Regulation
Policy Replacement - An action which eliminates the original policy or diminishes its
benefits or values
- Most the first year's premium is consumed by thecommission
Bad policy remplacement
- The premium is higher due to the insured's advancedage
issues
- Waiting periods begin anew
Questions with Correct Answers.
Terms in this set (350)
Insurance Financial protection against loss or harm - An arrangement
by which company gives customers financial protection
against loss or harm such as theft or illness in return for
premium payments.
Life Insurance Is based on actuarial or mathematical principles and
guarantees a specified sum of money upon the death of
the person who is insured.
Annuities Provide a stream of income by making a series of
payments to the annuitant for the annuitant's lifetime or
for a specifically designated period of time.
Risk Uncertainty regarding loss; the probability of loss occurring
for an insured or prospect
Speculative Risks Involve the possibility of loss and gain. (Not Insurable)
Pure Risks Involve the possibility of loss only. (Insurable)
Peril Cause of risk (when a building burns, fire is the peril)
Hazards The source of danger
Physical Hazard A hazard being of physical nature.
A person being treated of cancer, the disease is the physical
endangerment. (Blindness & deafness)
Occurs when individuals evade risk entirely. "If you don't
Risk Avoidance
drive, then you avoid getting in an auto accident."
Risk Reduction Takes place when the chances of loss are lessened.
Changing a lifestyle to minimize a known risk.
,Risk Retention Being aware of the risks involved and taking
precautions for financial protection. Auto policy's
deductible is an illustration of risk retention
Risk Transference The act of shifting the responsibility of risk to another in the
form of an insurance contract.
Adverse Selection Refers to the tendency for those individuals who present
less favorable insurance risk to seek or continue insurance
to a great extent than other risks.
Insuring Pure Risk Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Mutual Insurers Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Prohibited in Florida
Insurers
Pure Assessment Mutual Don't pay premium and total loss is divided among members
Company
Lloyds of London NOT considered an insurance company
- An association of individuals and companies that individually
underwriter insurance.
Fraternal Benefit Societies Must be nonprofit, have a lodge system, and offer insurance to its
members only
Insurer that offers relatively small policies with premiums
Home Service Insurer
payable on a weekly basis.
,Captive Agents A.k.a. Career agents
Works for only one insurer and sells only that insurers products
Independent Agents Is self-governing and actually works for himself. This affords him
the versatility to represent several insurers and their different
insurance products.
Special Agents Usually not license and don't sell insurance. Assist insurance
companies field representatives.
Career Agency System (GA) - Build sales staffs and agents are treated as
employees. They are recruited and trained. A principal of
the company supervises agents.
Personal Producing (PPGA) - The agent supplies his own working environment.
General Agency System Agents hired by a PPGA are considered employees of the
PPGA, not the insurance company, and are supervised by
the regional salary.
Independent Agency Agents represent several insurers through signed
System contracts and are paid on commission or fee basis, not
through salary.
Regulating the business of Legislation
insurance The Court System
State Insurance Departments
Paul v. Virginia - State tried to control insurance domiciled fromanother state.
- U.S. Supreme Court sided against insurancecompany
- Upholding the right of sate to regulate insurance
- States WIN
United States v. - Ruling is a form of interstate commerce
Southeastern - Should be regulated by the federal government
Underwriters Association - Fed Gov. WINS
(SEUA)
, The McCarran-Ferguson - Gave back some regulatory authority to the states
Act - Did not provide the states to regulate individually-
Insurance regulated by state law "is in the publics best
interest"
Intervention by SEC - Dealing with variable annuities
- Securities and Exchange Commission (SEC) shouldregulate
the variable annuities (since they're used for investments) &
variable life insurance.
- Therefore, agents must obey the rules to both SECand state
regulation.
Fair Credit Reporting Act - Fair and accurate report of information aboutconsumers
- Insurers must inform them about any investigationsbeing
made
- Then insurers must let the applicants know the nameof the
reporting agency
Financial Services - Revoking the Glass-Steagall Act
Modernization Act - This changed the industry so commercial banks,investment
banks, retail brokerages, and insurance companies can now
enter each other's lines of business
Admitted insurance - Office of Insurance Regulation has licensed them to carry out
company business in Florida
Nonadmitted Insurance - Have not been licensed by the the Florida Office of
Company Insurance Regulation
Policy Replacement - An action which eliminates the original policy or diminishes its
benefits or values
- Most the first year's premium is consumed by thecommission
Bad policy remplacement
- The premium is higher due to the insured's advancedage
issues
- Waiting periods begin anew
