MN LIFE ACCIDENT & HEALTH PRODUCER
EXAM
1. Speculative Risk: involves the chance of loss or gain, and is not insurable
2. Pure Risk: involves the chance of loss only, and is insurable
3. Peril: Something that causes a direct loss
4. Physical Hazard: Visible (Black ice)
5. Moral Hazard: dishonest tendencies (Fraud)
6. Morale Hazard: Carless, Irresponsible (leaving keys in car)
7. Exposure: susceptibility to loss
8. Adverse selection: those with high risk situations attempt to purchase insurance before
those with average or below- avg. risk
9. Insurance: The transfer of risk from one to many
10. Pooling of Risk: A large reserve of money available to pay claims
11. Law of Large numbers: the accuracy of the insurance companies loss projections
will increase, need large numbers in order to predict accurate predictions
12. Certificate of Insurance: - used after policy is issued
-contains summary of policy coverage & limits
-required in loan transactions and other matters
13. Deductibles: Straight: the insured pays a certain amount owe loss before the insurer is
required to make a payment
Aggregate: the insured pays for all losses until they exceed a certain amount (apply per
policy period) Corridor: is applied before benefits under major medical plans are paid,
,happens middle of deductible Elimination period: used w/ disability income policies & long
term care insurance
14. Methods of Managing risk: Avoidance: avoiding a particular activity that could
turn into a loss Reduction: taking action to reduce the possibility of a loss
Retention: the insured accepts possibility of loss and assumes part of risk, (a deductible is a form of
retention) Transfer: Shifting financial burden to one another
Sharing: chance of loss is shared among individuals (Pooling)
15. Indemnity: -restoring the insured to approx. the same position before there was a loss
-actual cash value= replacement-depreciation
-common exceptions
replacement cost: reimburses insured for damaged or destroyed property w/o subtraction
depreciation valued policy: pays face amount of total loss regardless of actual cash value
pro -rata-bility: insurer will pay proportional share of loss
16. Primary & excess indemnity: primary insurer pays first, then once exhausted, the
excess insurer pays too
17. Coordination of benefits: provisions apply when more than one group health
insurance policy covers the same loss
18. Insurable interest: property casualty: at
time of loss life & health: at time of application
19. Subrogation: gives insurer the right to collect from a negligent 3rd party after taking a loss
payment to insurer (prevents from collecting twice )
20. Utmost Good faith: representation:
statements made on application that are entirely true
misrepresentation:
, incorrect statements in application that don't attect insurability
material misrepresentation:
incorrect statements in application that involve info used to make underwriting decisions (usually void
coverage) concealment:
intentionally hiding info (fraud)
Warranty:
statements that must be true at time of loss, not obligated to pay claim if breached
21. Consideration (legal contract): an exchange of value between the parties to the
contract (payment of prem)
insurer: promise to provide indemnity in event of loss
insured's: pay prems & have truthful
representations
22. Unique features of contract: - unilateral: only 1 party makes a legally enforceabble
promise
-contract of adhesion: insured must accept contract as is.
-aleatory contract: an unequal value is exchanged between the parties (prem vs coverage)
-conditional contract: contract may be voided if policy conditions aren't met
23. Declarations: Property & casulty
-period of coverage
-policy limits
-premium
life & health insurance
-parties to contract
EXAM
1. Speculative Risk: involves the chance of loss or gain, and is not insurable
2. Pure Risk: involves the chance of loss only, and is insurable
3. Peril: Something that causes a direct loss
4. Physical Hazard: Visible (Black ice)
5. Moral Hazard: dishonest tendencies (Fraud)
6. Morale Hazard: Carless, Irresponsible (leaving keys in car)
7. Exposure: susceptibility to loss
8. Adverse selection: those with high risk situations attempt to purchase insurance before
those with average or below- avg. risk
9. Insurance: The transfer of risk from one to many
10. Pooling of Risk: A large reserve of money available to pay claims
11. Law of Large numbers: the accuracy of the insurance companies loss projections
will increase, need large numbers in order to predict accurate predictions
12. Certificate of Insurance: - used after policy is issued
-contains summary of policy coverage & limits
-required in loan transactions and other matters
13. Deductibles: Straight: the insured pays a certain amount owe loss before the insurer is
required to make a payment
Aggregate: the insured pays for all losses until they exceed a certain amount (apply per
policy period) Corridor: is applied before benefits under major medical plans are paid,
,happens middle of deductible Elimination period: used w/ disability income policies & long
term care insurance
14. Methods of Managing risk: Avoidance: avoiding a particular activity that could
turn into a loss Reduction: taking action to reduce the possibility of a loss
Retention: the insured accepts possibility of loss and assumes part of risk, (a deductible is a form of
retention) Transfer: Shifting financial burden to one another
Sharing: chance of loss is shared among individuals (Pooling)
15. Indemnity: -restoring the insured to approx. the same position before there was a loss
-actual cash value= replacement-depreciation
-common exceptions
replacement cost: reimburses insured for damaged or destroyed property w/o subtraction
depreciation valued policy: pays face amount of total loss regardless of actual cash value
pro -rata-bility: insurer will pay proportional share of loss
16. Primary & excess indemnity: primary insurer pays first, then once exhausted, the
excess insurer pays too
17. Coordination of benefits: provisions apply when more than one group health
insurance policy covers the same loss
18. Insurable interest: property casualty: at
time of loss life & health: at time of application
19. Subrogation: gives insurer the right to collect from a negligent 3rd party after taking a loss
payment to insurer (prevents from collecting twice )
20. Utmost Good faith: representation:
statements made on application that are entirely true
misrepresentation:
, incorrect statements in application that don't attect insurability
material misrepresentation:
incorrect statements in application that involve info used to make underwriting decisions (usually void
coverage) concealment:
intentionally hiding info (fraud)
Warranty:
statements that must be true at time of loss, not obligated to pay claim if breached
21. Consideration (legal contract): an exchange of value between the parties to the
contract (payment of prem)
insurer: promise to provide indemnity in event of loss
insured's: pay prems & have truthful
representations
22. Unique features of contract: - unilateral: only 1 party makes a legally enforceabble
promise
-contract of adhesion: insured must accept contract as is.
-aleatory contract: an unequal value is exchanged between the parties (prem vs coverage)
-conditional contract: contract may be voided if policy conditions aren't met
23. Declarations: Property & casulty
-period of coverage
-policy limits
-premium
life & health insurance
-parties to contract
