tekuhuwe's version from 2015-08-31 06:49


Question Answer
PREFERRED RISKSInsured who are considered __________are those who present the insurer with a below average risk of loss. Such risks may be insured at discounted or "preferred" premium rates due to their favorable factors such as healthy lifestyle, good medical history, or non-dangerous occupations. With regard to life insurance, those who are preferred risks will also have above average life expectancies.
STANDARD RISKSare those which reflect average exposures and who fall into a normal range. These insureds can be insured for standard rates and premiums. With regard to life insurance, a standard risk is the type of risk that is normally reflected in the insurer's mortality tables.
SUBSTANDARD RISKis one that reflects a higher than average risk of loss to the insurer. This can be due to an insured's health, occupation, and / or habits. These types of risks may still be acceptable to an insurer. However, the underwriters may use some type of rating technique in order to collect a higher amount of premium - or to restrict coverage in some way - in order to compensate for this higher amount of risk that the insurer is taking on. These higher premiums and / or policy restrictions will help to make such losses fall more within a normal range of loss for the insurer.
"FAIR CREDIT REPORTING ACT"passed in 1971, provides life insurance companies with guidelines and procedures for collecting underwriting information, including legitimate information gathering activities. In addition, a life insurance company must inform an applicant for coverage that an investigation may be made into their health, character, and other aspects of their personal life.
MEDICAL INFORMATION (MIB)is a non-profit association of life insurance companies. The entity was formed in 1902 for the purpose of exchanging underwriting information among its member insurance companies as well as for preventing fraud and misrepresentation related to insurance applications.
THE "LAW OF AGENCY"states that when one person, in this case the agent, is authorized to represent and act for another - in this case, the insurer or agency principal - then the actions of the agent will be legally assumed to be actions of the principal.
LIFE-ONLY AGENTSare entitled to transact insurance coverage on human lives - including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income. Applicants for a life-only license in the state of California will be required to complete 20 hours of pre-licensing education that cover these subject areas.
LIFE AND DISABILITY INS. ANALYSTmeans a person who, for a fee or compensation of any kind, paid by or derived from any person or source other than an insurer, advises, purports to advise, or offers to advise any person insured under, named as beneficiary of, or having any interest in, a life or disability insurance contract, in any manner concerning that contract or his or her rights in respect thereto.
LIFE SETTLEMENT BROKERmeans a person who, on behalf of an owner, and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and providers.
INSURANCE SOLICITORis a natural person employed to aid an insurance agent or insurance broker in transacting insurance other than life.
ERRORS AND OMISSION COVERAGE OR (E&O INSURANCE) is defined as a type of professional liability insurance that protects individuals and companies against claims that are made by clients for inadequate work or negligent actions. E&O coverage is similar to malpractice or professional liability insurance.
PROHIBITIONS OF FREE INSURANCE Based on the __________no insurer shall participate in any plan to offer or effect any kind or kinds of insurance or annuities in the state of California as an inducement to the purchase or rental by the public of any property, real or personal or mixed, or services, without any separate charge to the insured for such insurance. Nor shall any agent, broker, or solicitor arrange the sale of any such insurance.
FIDUCIARYis defined as a person who is legally appointed and authorized to hold assets in trust for another period.
INSURANCE ADMINISTRATORSrefer to any person who collects any charge or premium from, or who adjusts or settles claims on, California residents in connection with life, health, or annuity coverages.
AN ADMITTED INSURERis required to follow the guidelines that have been set forth by a state's department of insurance in states where the insurer conducts its business. This means that the insurer's premium rates, sales practices and techniques, cash reserves, and advertisements are all regulated by the state's insurance department. This also means that the insurance company is prohibited from modifying or deviating from any of its business practices or decisions without first obtaining approval from the state.
NON-ADMITTED INSURERSare not required to follow the regulations that are set forth by the state. These insurance companies do, however, need to prove that they are financially stable and able to conduct business. Being a non-admitted insurer means that the company will not be required to report its rates to the state's insurance department. Likewise, a non-admitted insurance company can charge premium rates that are in accordance with their estimated risk exposure.
DOMESTIC INSURERESare those that are incorporated in a particular state where they conduct business.
FOREIGN INSURERSare insurers that do business in one or some states and are incorporated in another state.
ALIEN INSURERSare insurers that are incorporated outside of the United States.
PRIMARY INSURERis the insurance company that transfers its loss exposure to another insurer in a reinsurance transaction.
MUTUAL INSURANCE COMPANIESare insurers that are owned by their policy holders. This is because these insurers are considered to be "mutually owned." Rather than having shareholder equity, a mutual insurance company will hold an account called policy holder's equity.
STOCK INSURANCE COMPANIESare insurers that are owned by shareholders.
FRATERNAL INSURERSare set up as a type of social or "brotherhood" organization where their members associate freely for a mutually beneficial purpose such as managing risk. These types of insurers only sell to their members and are considered to be charitable organizations.
DE-MUTUALIZATIONis a process whereby a mutual insurer becomes a stock company.
POST-CLAIMS UNDERWRITINGis the practice of denying a claim based on the insured's health status at the time that the policy was purchased. When using this practice, an insurer will re-evaluate the policy after an insured submits a claim.
THE FINANCIAL PRIVACY RULE OF THE GRAM-LEACH-BLILEYgoverns the collection and disclosure of consumer personal financial information by financial institutions. It also applies to companies - regardless of whether or not they are financial institutions - that receive such information.
THE "CALIFORNIA FINANCIAL INFORMATION PRIVACY ACT"became effective as of July 1, 2004. This act stated that a financial institution may not share or sell a consumer's nonpublic personal information without first obtaining the consumer's consent.
THE "INSURANCE INFORMATION AND PRIVACY PROTECTION ACT"which is part of the California Insurance Code, establishes the standards for the collection, use and disclosure of information gathered in connection with insurance transactions by any person engaged in the business of insurance. It aims to maintain a balance between the need for information by those conducting the business of insurance and the public's need for privacy.
AN "INSOLVENT INSURER"is an insurer that does not have the funds to meet all of the financial obligations that it is contracted to meet. According to the California Insurance Code Section 985, insolvency refers to the inability of an insurer to meet its financial obligations when they are due.
THE "CALIFORNIA LIFE AND HEALTH INSURANCE GUARANTEE ASSOCIATIONis a statutory entity that was created in 1991 when the California legislature enacted the California Life and Health Insurance Guarantee Association Act. This association is composed of all insurers that are licensed to sell life insurance, health insurance, and annuities in the state of California. In the event that a member insurer is found to be insolvent and is ordered to be liquidated by a court, the Guarantee Association Act enables the guarantee.association to provide production (up to certain limits that are stated in the Act) to California residents who are holders of life and health insurance policies, as well as annuity contracts, with the insolvent insurer.
THE WORD "MAY" AND "SHALL" As used in the California Insurance Code, the word "shall" is mandatory and it means must. The word "may" is permissive and it means can.
THE WORD "PERSON"means any person, association, organization, partnership, business trust, limited liability company, or corporation. Except for licensing, a person may also include the estate of a deceased individual.
NOTICE BY MAILUnless it is expressly provided otherwise, any notice required to be given to any person by any provision of the California Insurance Code may be given by mailing notice - postage paid, addressed to the person to be notified - at his or her residence or principal place of business in the state of California. The affidavit of the person who mails the notice, stating the facts of such mailing, is prima facie evidence that the notice was thus mailed. This notice must be postage prepaid, sent to the insured at the last known mailing address. There is no return postage receipt required.
A first or third party CLAIMANT as defined in the regulations.. is any person who asserts a right of recovery under a surety bond, an attorney, an insurance adjuster, a public adjuster, any member of the claimant's family, any person authorized by operation of law to represent the claimant, or any other specific qualified persons that have been properly designated by the claimant in the manner that is specified in the California Code of Regulations.
NOTICE OF LEGAL ACTION is defined as notice of an action commenced against the insurer with respect to a claim, or notice of action against the insured received by the insurer, or notice of action against the principal under a bond, and includes any arbitration proceeding.
PROOF OF CLAIMSis defined as any evidence or documentation in the possession of the insurer, whether as a result of its having been submitted by the claimant or obtained by the insurer in the course of its investigation, that provides any evidence of the claim and that reasonably supports the magnitude or the amount of the claimed loss.
With regard to FILE AND RECORD DUCUMENTATION... certain records must be kept and made available when needed. According to the California Insurance Code, every licensee's claim files shall be subject to examination by the Commissioner or by his or her duly appointed designees. These files shall contain all documents, notes and work papers (including copies of all correspondence) which reasonably pertain to each claim in such detail that pertinent events and the dates of the events can be reconstructed and the licensee's actions pertaining to the claim can be determined.
DUTIES UPON RECEIPT OF COMMUNICATIONS refers to the fact that all licensees who receive an inquiry from the Department of Insurance that concerns a claim must furnish a complete written response, which also includes any documentation and claim files requested, within 21 calendar days, that is based on the facts that are known to the licensee. Upon receipt of any communication from a claimant regarding a claim that reasonably suggests that a response is expected, the licensee needs to respond no later than 15 calendar days after receipt of the request. The licensee must furnish the claimant with a complete response that is based on the facts as they are then known by the licensee. This does not apply to receipt of a notice of legal action by the claimant.
BASED ON THE STANDARDS FOR PROMPT,FAIR AND EQUITABLE SETTLEMENTS no insurer shall discriminate in its claims settlement practices based on the claimant's race, gender, income, religion, language, sexual orientation, ancestry, national origin, physical disability, or upon the territory of the person insured. Upon receiving proof of claim, insurers must, within 40 calendar days, accept or deny the claim in whole or in part. The amounts accepted or denied shall be clearly documented in the claim file unless the claim has been denied in its entirety.
LIFE-ONLY INSURANCE is defined as protection against the loss of income that would result if the insured passed away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. In its purest sense, life insurance is something that pays a death benefit to someone when an insured person dies.
THE APPLICANTis the individual or entity that applies for an insurance policy. The applicant is typically the intended policy owner once a policy is issued - although with regard to life insurance, the applicant and the policy owner do not have to be the same person.
THE POLICY OWNERis the individual who retains all of the rights in a life insurance policy. Such rights may include selecting the beneficiary (or beneficiaries), choosing the settlement options, and exercising policy conversion. Typically, the applicant and the policy owner are the same person, however, this does not have to be the case.
THE INSUREDis the individual upon whose life is covered by an insurance policy. A death benefit will be paid out should this individual die while the life insurance policy is in force.
the BENEFICIARY of a life insurance policy is the person (or persons) or entity that will receive the death benefit proceeds at the death of the insured. The beneficiary is not a party to the contract until the death of the insured. The beneficiary does not necessarily need to be a person. For example, oftentimes a named beneficiary can be a business, a trust, or an estate.