A participating insurance policy may perform which of the following? Pay dividends to the owner of the policy. (A participation insurance policy will provide rewards to the owner based upon real mortality cost, interest gained and costs.) Events or events that raise the likelihood that an insured loss may occur are known as.
- Dangers- Conditions such as lifestyle and current health, or activities such as scuba diving are hazards that may increase the probability of a loss occurring.
- Which of the following is NOT a risk retention objective? To reduce the extent of the insured’s obligation in the case of a loss.
- Retention often stems from three fundamental insured goals: to decrease expenditures and enhance cash flow, to better control over claim reservings and claims settlements, and to finance losses that cannot be insured.
When evaluating the premium rates for an individual seeking insurance, an underwriter does NOT consider which of the following? Age, medical history, and sex give reliable statistical information for evaluating the likelihood of loss. Race, religion, sexual orientation, etc., are among the criteria that cannot be employed since there is insufficient statistical evidence to demonstrate that they affect the chance of loss; hence, they are deemed discriminatory.
- Which of the following insurance is held by investors with typical ownership rights, including voting rights? Stockholders own and control only stock insurance firms.
- Which of the following is the closest phrase to an approved insurer? Admitted- Insurers who fulfill the state’s financial standards and are permitted to do business in the state are deemed authorized or admitted into the state as a legal insurer.
Which authority is NOT included in the agent’s contract, but is necessary for the agent to conduct business? Implied- Implied authority occurs because a contract cannot specify every facet of an agent’s authority. The insurer must be able to rely on the application’s declarations, and the insured must be able to depend on the insurer to pay genuine claims.
In insurance contract formation, this is referred to as: Individuals transmit their risk of loss to a broader population through the usage of what? Insurance is the process through which an insured is protected against loss resulting from a specified future disaster or risk in exchange for a current premium payment.
Due to the fact that many other persons with a comparable or identical risk of loss are paying premiums, monies are available to compensate those who actually sustain that loss. Which of the following is not a policy consideration? The application submitted by a potential insured- Consideration is the transfer of anything of value between two parties in order to constitute a legal contract.
- Typically, an insurance offer is made when: In insurance, the applicant often makes an offer in the form of a completed application.
- Acceptance occurs when the underwriter of an insurance approves the application and provides the policy.
- Which of the following is an illustration of apparent authority of an insurer’s agent? The agent takes a premium after the grace period has expired.
What paperwork offers express authorization to an agent? Agent’s contract with the principle – Through the agent’s contract, the principal delegates authority to the agent. The insurer may infer that a moral hazard exists if the policyholder: – Is dishonest about his health on the application for insurance; or – Is dishonest about his income on the application for insurance.
Moral risks are applicants who lie on their insurance applications or who have previously filed false claims against insurers. When does acceptance often occur in drafting an insurance contract? When an insurer’s underwriter authorizes insurance coverage, the applicant often makes the offer in the form of an application.
Acceptance occurs when the underwriter of an insurance approves the application and provides the policy. Events or circumstances that raise the likelihood of an insured loss occurring are referred to as causes. Which of the following insurance choices would be considered a risk-sharing arrangement?? When obtaining insurance through a reciprocal insurer, the insureds share the risk of loss with other subscribers of that insurer.
Typically, an insurance offer is given when. – A full application is submitted. When insurance is bought through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal. the requirement that agents not commingle insurance cash with their personal funds is known as Fiduciary duty – Money obtained with relation to an insurance transaction must be retained in a position of trust by the agent or broker.
Which of the following is an illustration of the fiduciary obligation of a producer? A client’s confidence in the producer’s ability to handle premiums. – When handling the financial affairs of their clients, including the administration of premiums, an agent operates in a fiduciary position based on trust and confidence.
Which of the following are types of risk transfer?
Sorts of Risk Transfer – Risk transfer may be of essentially three types, namely, Insurance, Derivatives, and Outsourcing.
- Insurance: In the case of insurance, a corporation, the risk bearer, issues an insurance policy to the policyholder to pay for the stated risks to the insured asset of the policyholder. Insurance can be obtained to protect against the loss of an asset, property, health, or life.
- Derivatives are financial assets whose values are derived from the value of their underlying asset. The underlying asset may be anything, including a financial instrument, interest rate, or commodity. Any change in the value of the underlying asset will result in a change in the derivative’s value. Most often, derivatives are employed to hedge against certain financial risks.
- Outsourcing refers to the transfer of an assignment, task, or project to a third party for a set of conditions outlined in a contract between the parties. It allows the risk associated with an outsourced task to be transferred.