Health Insurance (Exam FX) Questions And Answers 100% Correct

Health Insurance (Exam FX) 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 l oss 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 th e 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 Responsib ility - Being in position of trust Elements of a Legal Contract - Agreement (offer and acceptance), consideration, competent parties, and legal purpose Offer - Element of a legal contract; applicant does this when submitting the application Acceptance - Element of a legal contract; when an insurer approves of an offer in its exact terms and issues a policy Consideration - Element of a legal contract; something of value that each party gives to each other