Health Insurance (Exam FX 2024 WITH COMPLETE SOLUTION)

Health Insurance (Exam FX 2024 WITH COMPLETE SOLUTION) Agent/Producer - Answer ️️ -A legal representative of an insurance company Broker - Answer ️️ -An insurance producer not appointed by an insurer and whom represents the client Insured - Answer ️️ -A person covered by an insurance policy Insurance policy - Answer ️️ -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 - Answer ️️ -Insurer, company who issues insurance policies Policyowner - Answer ️️ -The person entitled to exercise the rights and privileges in a policy Premium - Answer ️️ -The money paid to the insurance company for the insurance policy Reciprocal - Answer ️️ -A mutual interchange of rights and privileges Risk - Answer ️️ -Chance of a loss occurring Pure Risk - Answer ️️ -Situations that can only result in a loss Speculative Risk - Answer ️️ -Situations that can result in either a loss or gain Hazard - Answer ️️ -Conditions or situations that increase the chance of a loss occurring Physical Hazard - Answer ️️ -Individual characteristics that increase the chance of a loss (i.e. past medical history, blindness) Moral Hazard - Answer ️️ -Tendencies towards increasing risk such as lying on applications or submitting fraudulent claims Morale Hazard - Answer ️️ -Arise from a state of mind that causes indifference to loss such as carelessness Peril - Answer ️️ -Specific cause of a loss such as death, sickness or accidents Loss - Answer ️️ -Reduction, decrease, or disappearance of value of the person or property caused by a named peril Sharing - Answer ️️ -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 - Answer ️️ -Most effective way to handle risk; relieves the insured of the financial losses risks can bring Avoidance - Answer ️️ -Completely eliminating exposure to loss; effective but seldom practical Retention - Answer ️️ -AKA self-insurance; insured accepts responsiblity for the loss before the insurance company pays through use of deductibles and co-payments Reduction - Answer ️️ -Act of lessening the possiblity or severity of a loss (i.e. making healthy changes in lifestyle) Elements of Insurable Risks - Answer ️️ -Due to chance, measurable, predictable, not catastrophic, large random loss exposure Classifications of Insurers - Answer ️️ -Ownership, domicile, and authority Law of Agency - Answer ️️ -"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 - Answer ️️ -Powers granted by the insurer to the agent that are written in the contract Implied Authority - Answer ️️ -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 - Answer ️️ -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 - Answer ️️ -Being in position of trust Elements of a Legal Contract - Answer ️️ -Agreement (offer and acceptance), consideration, competent parties, and legal purpose Offer - Answer ️️ -Element of a legal contract; applicant does this when submitting the application Acceptance - Answer ️️ -Element of a legal contract; when an insurer approves of an offer in its exact terms and issues a p