Health Insurance (Exam FX) |142 Q’s and
A’s
Agent/Producer - -A legal representative of an insurance company
- Broker - -An insurance producer not appointed by an insurer and whom
represents the client
- Insured - -A person covered by an insurance policy
- Insurance policy - -A legal contract between a policyowner (and/or
insured) and an insurance company which agrees to pay the
insured/beneficiary for losses caused by specific events
- Principal - -Insurer, company who issues insurance policies
- Policyowner - -The person entitled to exercise the rights and privileges in a
policy
- Premium - -The money paid to the insurance company for the insurance
policy
- Reciprocal - -A mutual interchange of rights and privileges
- Risk - -Chance of a loss occurring
- Pure Risk - -Situations that can only result in a loss
- Speculative Risk - -Situations that can result in either a loss or gain
- Hazard - -Conditions or situations that increase the chance of a loss
occurring
- Physical Hazard - -Individual characteristics that increase the chance of a
loss (i.e. past medical history, blindness)
- Moral Hazard - -Tendencies towards increasing risk such as lying on
applications or submitting fraudulent claims
- Morale Hazard - -Arise from a state of mind that causes indifference to loss
such as carelessness
- Peril - -Specific cause of a loss such as death, sickness or accidents
, - Loss - -Reduction, decrease, or disappearance of value of the person or
property caused by a named peril
- Sharing - -Method of dealing with risk where a group with the same or
similar exposure to loss divvy up the losses that occur within that group;
reciprocal insurance exchange is a formal risk-[ ? ] arrangement
- Transfer - -Most effective way to handle risk; relieves the insured of the
financial losses risks can bring
- Avoidance - -Completely eliminating exposure to loss; effective but seldom
practical
- Retention - -AKA self-insurance; insured accepts responsiblity for the loss
before the insurance company pays through use of deductibles and co-
payments
- Reduction - -Act of lessening the possiblity or severity of a loss (i.e.
making healthy changes in lifestyle)
- Elements of Insurable Risks - -Due to chance, measurable, predictable, not
catastrophic, large random loss exposure
- Classifications of Insurers - -Ownership, domicile, and authority
- Law of Agency - -"The acts of the agent/producer within the scope of
authority are deemed to be acts of the insurer" is known as the...
- Express Authority - -Powers granted by the insurer to the agent that are
written in the contract
- Implied Authority - -Powers that the agent is presumed to have that are
not explicitly written, but that are needed to conduct business (i.e. collecting
and remitting premiums)
- Apparent Authority - -AKA Perceived; refers to a situation where a
reasonable third party would believe an agent had certain powers (i.e. using
the insurer's stationary, applicant believes the agent is authorized to
transact business on the insurer's behalf)
- Fiduciary Responsibility - -Being in position of trust
- Elements of a Legal Contract - -Agreement (offer and acceptance),
consideration, competent parties, and legal purpose
A’s
Agent/Producer - -A legal representative of an insurance company
- Broker - -An insurance producer not appointed by an insurer and whom
represents the client
- Insured - -A person covered by an insurance policy
- Insurance policy - -A legal contract between a policyowner (and/or
insured) and an insurance company which agrees to pay the
insured/beneficiary for losses caused by specific events
- Principal - -Insurer, company who issues insurance policies
- Policyowner - -The person entitled to exercise the rights and privileges in a
policy
- Premium - -The money paid to the insurance company for the insurance
policy
- Reciprocal - -A mutual interchange of rights and privileges
- Risk - -Chance of a loss occurring
- Pure Risk - -Situations that can only result in a loss
- Speculative Risk - -Situations that can result in either a loss or gain
- Hazard - -Conditions or situations that increase the chance of a loss
occurring
- Physical Hazard - -Individual characteristics that increase the chance of a
loss (i.e. past medical history, blindness)
- Moral Hazard - -Tendencies towards increasing risk such as lying on
applications or submitting fraudulent claims
- Morale Hazard - -Arise from a state of mind that causes indifference to loss
such as carelessness
- Peril - -Specific cause of a loss such as death, sickness or accidents
, - Loss - -Reduction, decrease, or disappearance of value of the person or
property caused by a named peril
- Sharing - -Method of dealing with risk where a group with the same or
similar exposure to loss divvy up the losses that occur within that group;
reciprocal insurance exchange is a formal risk-[ ? ] arrangement
- Transfer - -Most effective way to handle risk; relieves the insured of the
financial losses risks can bring
- Avoidance - -Completely eliminating exposure to loss; effective but seldom
practical
- Retention - -AKA self-insurance; insured accepts responsiblity for the loss
before the insurance company pays through use of deductibles and co-
payments
- Reduction - -Act of lessening the possiblity or severity of a loss (i.e.
making healthy changes in lifestyle)
- Elements of Insurable Risks - -Due to chance, measurable, predictable, not
catastrophic, large random loss exposure
- Classifications of Insurers - -Ownership, domicile, and authority
- Law of Agency - -"The acts of the agent/producer within the scope of
authority are deemed to be acts of the insurer" is known as the...
- Express Authority - -Powers granted by the insurer to the agent that are
written in the contract
- Implied Authority - -Powers that the agent is presumed to have that are
not explicitly written, but that are needed to conduct business (i.e. collecting
and remitting premiums)
- Apparent Authority - -AKA Perceived; refers to a situation where a
reasonable third party would believe an agent had certain powers (i.e. using
the insurer's stationary, applicant believes the agent is authorized to
transact business on the insurer's behalf)
- Fiduciary Responsibility - -Being in position of trust
- Elements of a Legal Contract - -Agreement (offer and acceptance),
consideration, competent parties, and legal purpose
