Michigan Credit Insurance -Test (Questions & Answers) Rated 100%

Adhesion - contract prepared by one and accepted or rejected by the other Adverse Selection - an instance in which those in high risk situations try to buy more insurance than those w/ avg or below avg risk Agent - someone who acts on behalf of another agent - someone who acts on behalf on another Aleatory - the outcome is affected by chance and the number of dollars given up by the contracting parties will be unequal Alien company - under laws of another country apparent - powers not given by the agency agreement but which a reasonable person would presume the agent has. The insurer honors actions or statements perceived to be within an agents authority, even if they were fraudulent in nature. avoidance - avoid engaging in risky behavior whenever possisble class - a similar group of loss exposures concealment - intentionally hiding material underwriting information from the insurer. This is insurance fraud Conditional - a claim will not be paid unless the conditions of the policy are metConsumer Credit Protection Act - this requires that customers be informed of all direct and indirect loan costs, including credit insurance costs. also customer is required to sign and date a disclosure statement indicating a desire for the insurance Contributory Coverage - the borrower has the option to purchase the protection and pays the identifiable charge Credit Disability Insurance - provides a monthly benefit equal to the monthly payment obligation if the primary borrower becomes disabled, for the duration of the disability, or until the end of the loan term Credit Life Insurance - pays off the credit if the insured borrower or co-borrower dies Credit Property Insurance - insurance writing in connection with a credit transaction where the collateral is NOT a motor vehicle, mobile home, or real estate AND that (1) covers perils to the goods purchased through a credit transaction or used as collateral and that concerns a creditors interest in the purchased goods or pledged collateral either in whole or in part; or (2) covers perils to goods purchased in connection with an open-end credit transaction Critical-period A&H (disability) Insurance - not a common form of insurance, but used occasionally. similar to truncated, except that borrower has a floating period of covg that can be used at any point during the term of the loan. Debt cancellation insurance - similar benefits to credit insurance. issued by lender, rather than ins comp. usually claimed as not being insurance. Decreasing Term - one of two types of contracts that provide the terms of ins coverage. amount of ins declines as the balance of the installment loan decreases. Direct Selling System - this is a way of selling insurance that bypasses agents completely and also policy owners deal directly with company home or regional office employees Domestic company - under laws of the stateeconomic peril - financial harm Elements of Insurable Risk - due to CHANCE PREDICTABLE MEASURABLE loss exposures must be LARGE RANDOMLY SELECTED cannot be CATASTROPHIC Elimination Plans (non-retroactive) - if the policy stipulates this type of waiting period, benefits are paid only from the specified number of days after an accident occurs or the onset of an illness resulting in "disability: as defined in the policy provision. NO payment is made until the debtor has been disabled for the specified period, 14 days being a popular waiting period. can never be retroactive estoppel - the legal impediment to denying the consequences of ones actions or deeds if they lead to detrimental actions by another. If the agent says something is covered, it is regardless of what the policy says exposure - measures an insurers susceptibility to loss express - powers given to the agent as part of the agency agreement Fair Credit Reporting Act - this sets forth the procedures for the collection and disclosure of information obtained on consumers through investigation and credit reports; it seeks to ensure fairness with regard to confidentiality, accuracy, and disclosure