Podcast
Questions and Answers
What is an agent in the context of insurance?
What is an agent in the context of insurance?
Who is the person covered by the insurance policy?
Who is the person covered by the insurance policy?
insured
What does a broker represent in the insurance context?
What does a broker represent in the insurance context?
the client
What is an insurance policy?
What is an insurance policy?
Signup and view all the answers
What is the definition of an insurer?
What is the definition of an insurer?
Signup and view all the answers
Who is referred to as the policyowner?
Who is referred to as the policyowner?
Signup and view all the answers
What constitutes a premium in insurance?
What constitutes a premium in insurance?
Signup and view all the answers
Define reciprocity in insurance terms.
Define reciprocity in insurance terms.
Signup and view all the answers
What is the definition of risk in insurance?
What is the definition of risk in insurance?
Signup and view all the answers
What is pure risk?
What is pure risk?
Signup and view all the answers
What does speculative risk involve?
What does speculative risk involve?
Signup and view all the answers
What does a hazard refer to in the context of insurance?
What does a hazard refer to in the context of insurance?
Signup and view all the answers
Describe a moral hazard.
Describe a moral hazard.
Signup and view all the answers
What is a peril in insurance terms?
What is a peril in insurance terms?
Signup and view all the answers
What does life insurance insure against?
What does life insurance insure against?
Signup and view all the answers
What does health insurance cover?
What does health insurance cover?
Signup and view all the answers
What is property insurance designed to protect?
What is property insurance designed to protect?
Signup and view all the answers
What is the definition of a beneficiary in an insurance policy?
What is the definition of a beneficiary in an insurance policy?
Signup and view all the answers
What is a contract in the context of insurance?
What is a contract in the context of insurance?
Signup and view all the answers
What must be considered valid in a life insurance contract?
What must be considered valid in a life insurance contract?
Signup and view all the answers
What does the term indemnity mean?
What does the term indemnity mean?
Signup and view all the answers
What does utmost good faith imply?
What does utmost good faith imply?
Signup and view all the answers
What is a viator in the context of viatical settlements?
What is a viator in the context of viatical settlements?
Signup and view all the answers
What is a buy-sell agreement?
What is a buy-sell agreement?
Signup and view all the answers
Define liquidity in insurance terms.
Define liquidity in insurance terms.
Signup and view all the answers
Study Notes
Insurance Terms and Definitions
- Agent: Legal representative of an insurance company; includes insurance brokers.
- Insured: Individual covered by an insurance policy, may not be the policyowner.
- Broker: Insurance agent not appointed by an insurer, representing the client.
- Insurance Policy: Contract between the policyowner and insurer for loss coverage.
- Insurer: The company issuing the insurance policy.
- Policyowner: Individual entitled to the rights within the insurance policy.
- Premium: Payment made to the insurance company for the policy.
Types of Risks and Covers
- Risk: Uncertainty or chance of loss.
- Pure Risk: Situations that can only result in loss or no change (no financial gain).
- Speculative Risk: Involves opportunities for loss or gain (not insurable).
- Hazard: Condition that increases the likelihood of an insured loss.
- Physical Hazard: Individual characteristics that increase risk due to physical conditions.
- Moral Hazard: Increased risk from the character/reputation of an insured.
- Morale Hazard: Risks caused by a state of indifference towards loss.
Types of Insurance
- Life Insurance: Protects against financial loss from premature death.
- Health Insurance: Covers medical expenses and income loss due to sickness or injury.
- Property Insurance: Covers loss of physical property or income-producing capabilities.
- Casualty Insurance: Covers loss/damage of property and related liabilities.
Risk Management Techniques
- Sharing Risk: Group exposure to loss is shared among participants.
- Transfer Risk: Financial loss is transferred to another party (insurance company).
- Avoidance of Risk: Eliminating exposure to potential loss.
- Retention: Self-insurance where the policyholder accepts loss responsibility.
- Reduction: Measures to mitigate risk (e.g., smoke detectors).
Contractual Elements in Insurance
- Indemnity: Limited reimbursement for loss to the extent of financial loss.
- Utmost Good Faith: Expectation of honesty between parties, prohibits fraud or concealment.
- Material Misrepresentation: Misleading statements that affect underwriting decisions.
- Warranties: Absolute truths critical for policy validity.
- Concealment: Withholding important information affecting insurance decisions.
- Beneficiary: Individual receiving benefits from an insurance policy.
Financial Aspects of Insurance
- Cash Value: Accumulated equity in permanent life insurance.
- Estate: Total net worth of an individual.
- Liquidation: Selling assets for capital.
- Lump-Sum: Full payment of insurance benefits at once.
- Insurable Interest: Requirement that policyowner could suffer a financial loss.
Specialized Insurance Concepts
- Viatical Settlements: Allows the terminally ill to sell life insurance for immediate cash needs.
- Key Person Insurance: Protects businesses from the loss of essential employees.
- Buy-Sell Agreement: Legal contract outlining business ownership succession upon death/disablement.
- Cross Purchase Agreement: Partners buy insurance policies on each other.
- Entity Purchase Agreement: The partnership buys policies on behalf of partners.
Additional Considerations in Insurance
- Death Benefit: Amount disbursed upon the insured's death.
- Education Funds: Allocate for children's schooling post-insured's death.
- Emergency Reserve Funds: Cover unexpected expenses after loss of the insured.
- Fraudulent Activities: Intentional actions to mislead and gain from insurance agreements.
Company Types in Insurance
- Stock Companies: Owned by stockholders sharing in profits/losses.
- Mutual Companies: Owned by policyholders; profits returned as dividends.
- Domestic Insurer: Company incorporated within the state.
- Foreign Insurer: Company incorporated in a different state.
- Alien Insurer: Company incorporated outside the U.S.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on essential terms related to insurance and agent definitions with these flashcards. This quiz is designed for those preparing for the Primerica pre-licensing course. Enhance your understanding of key concepts like agent, insured, and broker.
