Life and Health Insurance Cliff Notes 100% Pass

Life and Health Insurance Cliff Notes 100% Pass Multi-line insurer - Correct Answer ️️ -An insurance company selling more than one line of insurance Commercial Insurers - Correct Answer ️️ -are in the business of selling insurance for a profit. Commercial insurance is divided into two main groups: stock and mutual insurers. Lloyd's of London - Correct Answer ️️ -is not an insurance company. Members of the association form syndicates to underwrite and issue insurance- like coverage. This is a group of investors who share in unusual risk. Risk retention groups - Correct Answer ️️ -are mutual companies formed by a group of people in the same industry or profession. Examples would be pharmacists, dentists, and engineers. Contract of Adhesion - Correct Answer ️️ -Because an insurance contract has been prepared by an insurance company with no negotiation, it is considered a contract of adhesion. In a contract of adhesion there is only one author - the insurance company. If there is an ambiguity in the contract, the courts always favor the insured over the insurer. Aleatory Contract - Correct Answer ️️ -Insurance contracts are aleatory, which means there is an unequal exchange. The premiums paid by the applicant is small in relation to the amount that will be paid by the insurance company in the event of a loss. • Consideration may be unequal • The outcome depends on chance or uncertain event • A legal bet is considered an aleatory contract Unilateral Contract - Correct Answer ️️ -One sided agreement, where only the insurer is legally bound. In an insurance contract only the insurance company is legally bound to do anything. Conditional Contract - Correct Answer ️️ -Insurance contracts are conditional because certain conditions must be met by all parties in the contract. This is needed when a loss occurs in order for the contract to be legally enforceable. Valued vs. Indemnity - Correct Answer ️️ -Life insurance contracts are valued contracts, which means it will pay a stated amount. Health insurance contracts are indemnity contracts and will only reimburse the actual cost of the loss (pay medical bills, etc.) You cannot profit from an indemnity contract. Utmost Good Faith - Correct Answer ️️ -Implies that there will be no attempt by either party to misrepresent, conceal or commit fraud as it pertains to insurance policies. Warranties - Correct Answer ️️ -Statements made by the applicant guaranteed to be true - (name, DOB) Representations - Correct Answer ️️ -Statements made by the applicant believed to be true - (height, weight) Concealment - Correct Answer ️️ -Witholding of information or facts by the applicant - (smoker, diabetes) Insurable Interest - Correct Answer ️️ -Requires that an individual have a valid concern for the continuation of the life or well-being of the person insured. Without insurable interest, an insurance contract is not legally enforceable and would be considered a wagering contract. NOTE: Insurable interest only needs to exist at the time of the application (the inception of the contract). Reasonable Expectations - Correct Answer ️️ -A concept which states that the insured is entitled to coverage under a policy that a sensible and prudent person would expect it to provide. Reinforces the rule that ambiguities in insurance contracts should be interpreted in favor of the policyholder. Stranger-Originated Life Insurance - Correct Answer ️️ -In Stranger-Originated Life Insurance, or STOLI, a consumer purchases a life insurance policy with the agreement that a third party agent/broker or investor will purchase the consumer's policy and receive the proceeds as a profit upon the consumer's death. The three types of agent authority - Correct Answer ️️ -• Expres