Fl Life, Health and Annuities Licensing 2-15 (Questions and Answers, 100% Verified)

Fl Life, Health and Annuities Licensing 2-15 (Questions and Answers, 100% Verified) Fl Life, Health and Annuities Licensing 2-15 (Questions and Answers, 100% Verified) 3 ways insurance contracts are different than other legally binding documents Number one. They are aleatory. Meaning the insured pays a premium but may not receive anything back. Number 2. They are contracts of adhesion meaning the contract was prepared by one party. number 3. They are unilateral meaning only the insurance company promises anything in the contract How long life insurance has to challenge the validity of a contract due to fraud Typically 2 years. Can't contest- after if found out fraud occurred during application. Fiduciary A person who holds a position of special trust and confidence. Example: when they accept premium payments on behalf of the insurer that person is a fiduciary. Express authority The intended power given by the principal to the agent. Granted by the agency contract. Ex: agent has the express authority to solicit applications for insurance on behalf of the company. Legal purpose For a contract to be enforceable in court the object of it and its intent must be legal. Consideration in exchange for a member's premium the insurer promises to pay when there is a loss. Perils, hazard, risk A peril is the cause of a risk. A peril is the immediate specific event causing loss and giving rise to risk. When a building burns, fire is the peril. A hazard is the source of danger. The hazard is the underlying factor behind the peril that leads to the probability of a particular loss to the insurer. It is the active ingredient that could create a peril, which could then lead to a particular loss event Independent agents Cell all plans, Blue Cross Blue Shield, Humana, etc Captive or career agent Can only sell one companies insurance policies Agent vs broker Both are known as producers. Agent: tied to an insurance company. Broker: represents the buyer and can sell many insurance carriers HMOs are distinct because of what? They provide the insurance and the health care itself. Reinsurers Insurance for an insurance company mutualization vs demutualization Mutual: going from stock insurance company to Mutual Insurance Company. De mutual: the opposite Aleatory contract A contract that: - there is an element of chance for both parties - dollar values exchanged may not be equal. Ex: member pays premium but may not receive benefit for a long time. Insurance contract is conditional in that... The insurance company agrees to pay benefits only when there is a loss Valued contract The insurer pays a specified amount of money to or on behalf of the insured upon the occurrence of a defined loss. the money amount is not related to the extent of the loss. Ex: a life insurance policy is an example of a valued contract. Conditional receipt Member pays the initial premium, on the condition that they will make it through enrollment and are eligible. - it is the ethical responsibility of the agent to explain this. Concealment The failure of the applicant to disclose a known material fact when applying for insurance The fair credit reporting act of 1970 - protects an individual's right to privacy - law requires fair and accurate reporting of information about consumers - insurance must inform applicants about any investigations - if something is used to deny or charge higher rates, applicant must be given the name of the reporting agency Assessment mutual company If premiums don't cover cost of losses, co. Can assign further premium charges. Two types that are based on how premiums are charged - pure assessment company: Premium is only paid when loss occurs - advanced premium company: premium is paid at start of policy, money left over is refunded after insurer adjusts for cost of business 3 incompetent applicant possibilities for a contract