Webce Life and Health Question and Answer

Representations and Warranties - Representations are statements the applicant makes on an application that are deemed to be true to the applicant's best knowledge. Warranties are statements the insurer makes in the contract. Underwriting vs. Actuarial Departments - Two related insurance company functions. Through the process of _________, applications are assessed for insurability and to assign premium rates. The ________ department analyzes data to help estimate future losses and to produce rate tables. Managerial System vs. General Agency System - Two variations of the career agency system in which producers represent a single company. One is headed by a company employee called a general manager (GM), the other by an independent contractor called a general agent (GA). Fraternal Insurance Company - A non-profit form of insurance provider sponsored by an organization of people who share a common ethnic, religious, or vocational affiliation. Peril and Hazard - Two related general insurance terms: Peril is the immediate cause of a loss (and the event that is insured against). Hazard is any condition that increases the risk of incurring a loss. Contract of adhesion - A type of contract in which one party (the offeror) drafts the terms that must be accepted as-is by the offeree. Insurance policies are this type. Mutual Insurance Company - A form of insurance company that is owned by policyowners. May distribute policy dividends (non-taxable) through participating policies. Independent Agency System - An insurance distribution system in which the manager and producers are fully independent and not affiliated with any single insurer. Buyer's Guide and Policy Summary - Two related disclosure documents that are required by most states to be presented to life and health insurance applicants at some point during the buying process. Risk - A basic insurance term referring to the possibility of incurring a loss. Law of Large Numbers - A mathematical principle that is the basis for predicting the odds of a loss occurring in a certain population in any given year. Social Security (OASDI) - A federal insurance program that provides disability, death, and retirement benefits to covered workers and their qualifying beneficiaries. Agents vs. Brokers - Two basic types of insurance producer: an ______ represents a single insurer and a _____ sells policies from multiple insurers. Reinsurance - The process through which insurance companies spread large risks among other insurers. Domestic, Foreign, and Alien Insurers - Insurers can be categorized by their state of domicile. There are three categories, known as _____, _____, and _____. Stock Insurance Company - A form of insurance company that is owned by stockholders who may or may not also be policyowners. May distribute stock dividends (taxable). Admitted Insurer - An insurer that has a certificate of authority in a given state is said to be an___________ insurer in that state.