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Basic Principles
Life and Health Insurance
| Keyword | Hints |
|---|---|
| Actuarial Department | |
| Adjuster | |
| Alien Insurer | |
| Admitted Insurer | |
| Agent | |
| Authorized Insurer | |
| Broker | |
| Captive Insurer | |
| Certificate of Authority | |
| Claims Department | |
| Divisible Surplus | |
| Domestic Insurer | |
| Foreign Insurer | |
| Fraternal Benefit Society | |
| Independent Insurance Agency | |
| Insurance | transfer of risk from one party to another through legal contract spreads the risk of loss from one person to a large number of persons through pooling of premiums |
| Insured | the covered person in insurance |
| Insurer | assumes risk of large financial loss in exchange for payment of premiums company providing insurance |
| Lloyds of London | |
| Marketing Division | |
| Monoline Insurer | |
| Multi-Line Insurer | |
| Mutual Insurance Company | |
| Non-Admitted Insurer | |
| Nonparticipating Policy | |
| Participating Policy | |
| Personal Producing General Agency (PPGA) | |
| Policy Owner | person purchasing insurance obtains large quantity of coverage in return for a small fee (premium) |
| Private (Commercial) Insurer | |
| Producer | |
| Proposed Insured | |
| Public Adjuster | |
| Reciprocal Insurer | |
| Reinsurance | |
| Reinsurer | |
| Risk Retention Group | |
| Sales Department | |
| Self-Insurer | |
| Service Representatives | |
| Solicitors | |
| Stock Insurance Company | |
| Surplus Lines Insurance | |
| Unauthorized Insurer | |
| Underwriting Department | |
| Indemnify | restore to the same financial position before the loss no profit or gain from loss |
| principle of indemnity | goal of an action to restore (indemnify) |
| contract examples of indemnity | accident, health, property, casualty |
| valued contract | life insurance is an example pay a predetermined amount (value) regardless of actual loss |
| life insurance | pays death benefits creates instant estate regardless of when death occurs |
| annuities | generates lifetime income stream if people outlive their income |
| conventional methods of insurer classification | location, ownership, state authorization |
| private insurance | commercial individual, group, industrial, or blanket |
| government | non-commercial, social, federal or state offers variety of coverage such as crop insurance, FDIC insurance on bank deposits |
| proprietary insurer example | profit-motivated stock company |
| self-insurer | has a self-funded plan to cover potential loss used by large companies to fund pension plans and some health insurance plans utilizes insurance companies if insurance is above a specified maximum loss level, but anything below, the self-insurer handles |
| government insurer | cover catastrophic perils or loss not insurable by commercial can write on insurable risks in competition or instead of commercial insurance such as worker's compensation |
| catastrophic peril or losses | war, flood, nuclear |
| social insurance programs | OASDI Old-Age, Survivors, and Disability Insurance (Social Security), Medicare Parts A and B, Medicaid, SGLI, VGLI |
| SGLI | Serviceman's Group Life Insurance for full-time members of armed forces up to $400,000 in $50,000 increments |
| lines of insurance | life insurance and annuities accident and health insurance property and casualty insurance |
| stock and mutual companies | commercial insurers whom can write life, health, property, and casualty insurance |
| stock insurance company | owned by private investors, typically publicly traded commercial under state laws to make profit for stockholders stockholders provide capital for insurer management selected by stockholders dividends paid to shareholders; subject to taxes cap gain |
| stock companies | seek to grow post-tax earnings (earned surplus or retained earnings |
| equity | earnings retained by company and owned by shareholders |
| nonparticipating insurance policies | don't pay policy dividends policy owners are not owners of insurance company therefore no ownership privileges like electing management |
| mutual insurance companies | no stockholders, ownership rests with policy owners insured is both customer and owner of insurer policy owners vote for management policy owners may get policy dividends (not guaranteed), after paying claims and operational costs dividends non-tax |
| participating insurance policy | par contract policy owners participate in the distribution of dividends |
| divisible surplus | amount of earnings paid to policy owners as dividends after insurance company sets asides funds required to cover reserves, operating expenses, general business purposes used by stock insurance companies by issuing par policies that pay policy dividends |
| mutual company policy dividends are usually paid timely | annually |
| mutualization | convert stock company into mutual company |
| demutualization | convert mutual company to stock company existing policyholders are provided with shares of stock in proportion to gross insurance premiums |
| raising funds by sale of stock | shares of stock converted from proportionate gross insurance premiums |
| mixed plan | participating and non-participating policies issued |
| pure assessment mutual company | loss-sharing by group members no premium is payable in advance each member asses portion of losses |
| advance premium assessment mutual company | charges premium at beginning of policy period any surplus is returned as dividends if total premiums aren't enough to cover losses, additional assessments are levied against members maximum assessment is limited either by state laws or insurer by-laws |
| fraternal benefit societies | noted primarily for social, charitable, benevolent activities also issue insurance for members membership based on religion, nationality, ethnicity |
| characteristics of fraternal benefit societies | non-profit, lodge system including ritualistic work with representative government with elected officers, must exist for reasons other than obtaining insurance, more concerned about maintaining minimum reserves and surpluses than provide dividends or gain |
| reciprocal insurer | unincorporated organization overseen by board of governors or directors; members or subscribers agree to insure one another's risks; each policy holder shares risk rather than separate entity; think risk-sharing, not risk transfer; AIF handles |
| risk retention group | under terms of LRRA 1986 to provide liability insurance for individuals and entities with a common bonds; required to follow domiciled state laws, but federal law prevails otherwise |
Created by:
NPH
Popular Insurance sets