Florida Insurance 2-15 Exam Terms Questions And Answers

Florida Insurance 2-15 Exam Terms Questions And Answers Insurance - ANS Financial protection against loss or harm - An arrangement by which a company gives customers financial protection against loss or harm such as theft or illness in return for premium payments. Life Insurance - ANS Is based on actuarial or mathematical principles and guarantees a specified sum of money upon the death of the person who is insured. Health Insurance - ANS Evolved from scientific principles to provide funds for medical expenses due to sickness or injury and to cover loss of income during disability Annuities - ANS 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 - ANS Uncertainty regarding loss; the probability of loss occurring for an insured or prospect Speculative Risks - ANS Involve the possibility of loss and gain. (Not Insurable) Pure Risks - ANS Involve the possibility of loss only. (Insurable) Peril - ANS Cause of risk (when a building burns, fire is the peril) Hazards - ANS The source of danger Physical Hazard - ANS A hazard being of physical nature. A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness) Risk Avoidance - ANS Occurs when individuals evade risk entirely. "If you don't drive, then you avoid getting in an auto accident." Risk Reduction - ANS Takes place when the chances of loss are lessened. Changing a lifestyle to minimize a known risk. Risk Retention - ANS Being aware of the risks involved and taking precautions for financial protection. Auto policy's deductible is an illustration of risk retention Risk Transference - ANS The act of shifting the responsibility of risk to another in the form of an insurance contract. Adverse Selection - ANS 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 - ANS 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 - ANS Participating policies Owned by policyholders Vote for directors and trustees Directors and management have control Typically higher rates Assessment Mutual Insurers - ANS Prohibited in Florida Pure Assessment Mutual Company - ANS Don't pay premium and total loss is divided among members Lloyds of London - ANS NOT considered an insurance company - An association of individuals and companies that individually underwriter insurance. Fraternal Benefit Societies - ANS Must be nonprofit, have a lodge system, and offer insurance to its members only Service Providers - ANS Contract for and sell medical and hospital care services. Participants are known as subscribers. Home Service Insurer - ANS Insurer that offers relatively small policies with premiums payable on a weekly basis. Captive Agents - ANS A.k.a. Career agents Works for only one insurer and sells only that insurers products Independent Agents - ANS Is self-governing and actually works for himself. This affords him the versatility to represent several insurers and their different insurance products. Special Agents - ANS Usually not license and don't sell insurance. Assist insurance companies field representatives. Career Agency System - ANS (GA) - Build sales staffs and agents are treated as employees. They are recruited and trained. A principal of the company supervises agents. Personal Producing General Agency System - ANS (PPGA) - The agent supplies his own working environment. Agents hired by a PPGA are considered employees of the PPGA, not the insurance company, and are supervised by the regional salary. Independent Agency System - ANS Agents represent several insurers through signed contracts and are paid on commission or fee basis, not through salary. Regulating the business of insurance - AN