Primerica' Flashcards
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
What document is required for an insurance company transact insurance?
Certificate of Authority
What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?
Underwriting
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purposes
The type of insurance company organized to return any surplus money to its policyholders is known as what?
Mutual company
Who owns stock companies?
Stockholders
What are the strategies used by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?
Send the application back to the applicant for signature
If an applicant does not receive his or her insurance policy, who would be held responsible?
The agent
What type of report provides information about the applicant's hobbies, habits and financial status?
Inspection report
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, Foreign, and Alien
In order to transact insurance within a given state, an alien insurer must first obtain what?
Certificate of Authority
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
For the purpose of insurance, what is risk?
Uncertainty of loss
If an insurer needs to obtain information about the applicant from investigators, what is the required to do?
Provide the applicant a Disclosure Authorization Notice
What are the three types of agent authority?
Express, Implied, and Apparent
What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
What are the three types of hazards?
Physical, Moral, and Morale
What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion
According to the Law of Agency, a principal is represented by whom?
Agent or Producer
Whom does an insurance agent represent?
Insurance comany
A state-issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of Authority
A situation in which a person can only experience a loss and no gain presents what type of risk?
Pure risk
Insurance is used to transfer what to the insurance company?
Financial responsibility for loss
When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?
Adverse selection
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material