Webce Life and Health Questions with 100% Correct Answers

Representations and Warranties Correct Answer Representations are statements the applicant makes on an application that are deemed to be true to the applicant's best knowledge. Warranties are statements the insurer makes in the contract. Underwriting vs. Actuarial Departments Correct Answer Two related insurance company functions. Through the process of _________, applications are assessed for insurability and to assign premium rates. The ________ department analyzes data to help estimate future losses and to produce rate tables. Managerial System vs. General Agency System Correct Answer Two variations of the career agency system in which producers represent a single company. One is headed by a company employee called a general manager (GM), the other by an independent contractor called a general agent (GA). Fraternal Insurance Company Correct Answer A non-profit form of insurance provider sponsored by an organization of people who share a common ethnic, religious, or vocational affiliation. Peril and Hazard Correct Answer Two related general insurance terms: Peril is the immediate cause of a loss (and the event that is insured against). Hazard is any condition that increases the risk of incurring a loss. Contract of adhesion Correct Answer A type of contract in which one party (the offeror) drafts the terms that must be accepted as-is by the offeree. Insurance policies are this type. Mutual Insurance Company Correct Answer A form of insurance company that is owned by policyowners. May distribute policy dividends (non-taxable) through participating policies. Independent Agency System Correct Answer An insurance distribution system in which the manager and producers are fully independent and not affiliated with any single insurer. Buyer's Guide and Policy Summary Correct Answer Two related disclosure documents that are required by most states to be presented to life and health insurance applicants at some point during the buying process. Risk Correct Answer A basic insurance term referring to the possibility of incurring a loss. Law of Large Numbers Correct Answer A mathematical principle that is the basis for predicting the odds of a loss occurring in a certain population in any given year. Social Security (OASDI) Correct Answer A federal insurance program that provides disability, death, and retirement benefits to covered workers and their qualifying beneficiaries. Agents vs. Brokers Correct Answer Two basic types of insurance producer: an ______ represents a single insurer and a _____ sells policies from multiple insurers. Reinsurance Correct Answer The process through which insurance companies spread large risks among other insurers. Domestic, Foreign, and Alien Insurers Correct Answer Insurers can be categorized by their state of domicile. There are three categories, known as _____, _____, and _____. Stock Insurance Company Correct Answer A form of insurance company that is owned by stockholders who may or may not also be policyowners. May distribute stock dividends (taxable). Admitted Insurer Correct Answer An insurer that has a certificate of authority in a given state is said to be an___________ insurer in that state. Express, Implied, and Apparent Authority Correct Answer Express authority—The right to sign an application as an agent for the insurer. Implied authority—Using a computer program to identify insurance needs and to recommend solutions. Apparent authority—Advising the applicant to not disclose on the application any important health facts that might reduce his or her insurability. Indemnity vs. Valued Contract Correct Answer Two forms of insurance contract. An indemnity contract bases policy benefits on reimbursement of actual losses. A valued contract bases benefits on a stated amount without regard for the value of the loss. Loss Correct Answer An unplanned reduction in economic value resulting from the occurrence of a covered peril. Medicare Correct Answer A federal insurance program that provides medical care benefits to covered workers (retirees). Underwriting Correct Answer The process by which an insurance company assesses an application to determine if it represents an insurable risk. Risk Management Correct Answer The natural process by which people contend with the perils faced daily, of which there are five common techniques. The five basic elements of a valid contract Correct Answer Offer, acceptance, consideration, competent parties, and legal purpose Concealment Correct Answer The willful nondisclosure of material facts on an application for the purpose of obtaining insurance.