Insurance live Class Deck Part 2

insurable chance of loss only

chance of gain or loss (lottery ticket)

what caused the loss (life insurance, death of insured)
insurance spreads the risk and reduce the financial uncertainty assiciated with loss

RISK SHARING-owning car get in car accident and pay deductible
TRANSFER-reinsurance company where risk is transferred to other companies; ex 25% is owned by one company, 25% antoher and writing company has 50% of risk
AVOIDANCE-exclusion clauses (hazerdos activities, pilot, military)
REDUCTION-ex homeowners insurance limits water damage to 10K
RETERNTION-ex more good risk tha bad

selection not in favor of insurance compnay tendency of poorer risks to actively seek insurance coverage

false

true

false

in order to purchase insurance on a person the owner must posses an insurable interest in that person
based on financial relationship
-must exist at applicaiton
-not required to exist at time loss occurs
-insured must be made aware of the purchase by signing the app
-an individual has an unrestricted/unlimited insurable interst in herself. the amount of insurance is limited by underwriting ex. I want life policy on me so ken is taken care of. 10M policy underwriting would examine if ken would lose 10M if I dies

licensed in that state cert of authority

carrier that has home office in which the state they are authorized to sell insurance
ex mass mutual in state of mass

another state than home state
ex mass mutual with office in Connecticut

home office in another country that sells insurance in the state
ex sunlife of Canada

owned by policy holders, insurance dividends

insurance purchased by insurance companie transwer of risk

individual agreements on a case by case basis

automatic acceptance of a portion of risk

the relationship that exists between two parties, when one party acts on behalf of another
ex agent/producer reps a particular insurer
agency is referred to as the pricipal while the agent is authorized rep

actual powers an agent has that are defined in their contract ex agent has expressed authorit to rep company and receive commissions

usual and customary business practices that may not specifically be listed in contract

authroity that the public perceives an agent to have

offer and acceptance

the lawful exchange of one value for another
application info+premium=coverage

bothparties must be legally competent to enter into contract

sale cannotbe contradictory to the good of public

a contract that may or may not provide more in benefits than premiums
ex buys life insurance and dies 3 months later will 250K payout

a contract drawn up by one part (the insurer) take it or leave it
ex car insurances

a legal agreement in which only one of the two parties needs to act to make the contract enforceable

terms specifying obligations of an insured to keep a policy in force

pay a stated sum regardless of the actual loss incurred

(life insurance)

pay an amount equal to loss

both parties act with honesty and integrity

financial responsibility position of trust

anything answered on application
statment that is true to the best of the applicants knowledge or belief can be changed prior to policy issue not after

statment made by the insurer that is guaranteed

a flase statment that will not affect underwriting
is not material will not effect issue
ex mailing address error

a false statment or concealment that is important to the issuance of a policy and affects policy issue
ex health statments, drug abuse, driving habits etc

failure to voluntarily disclose material facts relevant to underwriting process

intentional deception
ex filing false claim

preventative care
pre paid premium
enrollee members
small co pay
most are closed panel plans

blue cross=hospital benefits blueshield=pysicians

enters into contractural agreement with hospital and doctors
does not provide treatment directly
pop creates preferred provider arrangments with hospitals in exchange for a discounted cost
-employees will pay a lower deductible
-can go outside pop will pay higher cost
-ppo can choose any doctor within network

government organization that provides health care benefits for dependents of military personnel

no

no only military personnel

yes usual customary reasonable medical bill are covered

provides income if the insured become disabled and becomes unable to earn paycheck

pay hospital and doctor bills resulting from injurt and illness

inability to perform your own normal occupation or daily duties
-any occupational the inability to perfrom any gainful occupation
-more iberal definition more expensive the premium

a type of total and permanent disability based on loss of sight hearing speech and loss of limb
paid despite the fact the insured is still working
paid as Lump sun

disability income based on earned not unearned
ex commisions bonuses vs rental income interest investments

the inability to perform some but not alll of your duties
-follows a period of total disability added a s a rider and pays 50% of disability benefit

another form of partial based on percentage of lost income
fluctuates monthyl

no elination period to get benefits
if after 6 months a new disability and a new elemination period is issued

period preceding each disability during which benefits are not paid
common elimniation 230/60/90 days
longer the elinination the cheaper