Term
| T/F insurance eliminates risk |
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Definition
| False. Insurance manages risk and the costs associated with it, It does not eliminate risk. |
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Term
| In establishing the rates to charge premium payers on life insurance, a company will use |
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Definition
| mortality, interest, expenses. Establishing life premiums consists of mortality, interest and expenses |
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Term
| Name two elements of "non-medical" applications |
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Definition
| A medical exam may not be needed, but Answers to application questions could trigger a requirement to have a physical exam performed. Therefore, underwriting always reserves the right to ask any potential insured to take a physical. |
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Term
| T/F Life insurance can create and immediate estate and Life insurance premiums can be paid in full or on a monthly basis |
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Definition
| True. These are characteristics of life insurance. |
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Term
| If an individual dies and fails ot leave a will to direct the disbursement of assets, that person is said to have died |
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Definition
| intestate. A will is called the "last will and TESTament" so when one dies without one, they inTESTate. |
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Term
| T/F The medical information bureau is a source of information available to the underwriting departments of insurance companies. Along with other sources of information, it helps insurers in making decisions whether to insure or not |
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Definition
| True. The MIB's sole purpose is to hep underwriting departments assess risks so the company can decide if a policy should be issued or not |
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Term
| T/F Insurance companies expect agents and brokers to assist in the underwritig process and risk selection of applications they are submitting |
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Definition
| True. The home office underwriting department has the final decision as to whether a policy will be issued. |
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Term
| T/F Insurers will not charge more than 25% of the annual premium if the current premiums are not paid quarterly |
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Definition
| Fals. people who pay premiums on a mode other than annually will be charged a financing charge. |
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Term
| An insurer classifies the insured according to their "occupation." If the insured has more than one occupation, what will the insurance company typically do? |
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Definition
| Classify the insured at the occupation which reflects the highest hazard. The most hazardous occupation will alwys e used as it only takes one incident to cause a loss. |
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Term
| The process whereby an insurer has an agreement with other insurers to share amounts of insurance over established retention limits is known as |
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Definition
| reinsurance. Every company has a retention limit established for it. |
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