Florida Insurance 2-14 Exam Terms Actual

Florida Insurance 2-14 Exam Terms / Actual Questions & Verified Answers, / .Terms in this set (350) Insurance Financial protection against loss or harm - An arrangement by which company gives customers financial protection against loss or harm such as theft or illness in return for premium payments.Life Insurance Is based on actuarial or mathematical principles and guarantees a specified sum of money upon the death of the person who is insured.Annuities Provide a stream of income by making a series of payments to the annuitant for the annuitant's lifetime or for a specifically designated period of time.Risk Uncertainty regarding loss; the probability of loss occurring for an insured or prospect Speculative RisksInvolve the possibility of loss and gain. (Not Insurable) Pure RisksInvolve the possibility of loss only. (Insurable) PerilCause of risk (when a building burns, fire is the peril) HazardsThe source of danger Physical Hazard A hazard being of physical nature.A person being treated of cancer, the disease is the physical endangerment. (Blindness & deafness) Risk Avoidance Occurs when individuals evade risk entirely. "If you don't drive, then you avoid getting in an auto accident." 1 / 4

Risk ReductionTakes place when the chances of loss are lessened.Changing a lifestyle to minimize a known risk.Risk RetentionBeing aware of the risks involved and taking precautions for financial protection. Auto policy's deductible is an illustration of risk retention Risk Transference The act of shifting the responsibility of risk to another in the form of an insurance contract.Adverse Selection Refers to the tendency for those individuals who present less favorable insurance risk to seek or continue insurance to a great extent than other risks.Insuring Pure Risk Loss must be due to chance Loss must be definite and measurable Risk must be predictable Loss must NOT be catastrophic Exposure to loss must be large Loss exposures must be randomly selected Mutual InsurersParticipating policies Owned by policyholders Vote for directors and trustees Directors and management have control Typically higher rates Assessment Mutual Insurers Prohibited in Florida Pure Assessment Mutual Company Don't pay premium and total loss is divided among members Lloyds of LondonNOT considered an insurance company

• An association of individuals and companies that individually

underwriter insurance.Fraternal Benefit SocietiesMust be nonprofit, have a lodge system, and offer insurance to its members only 2 / 4

Home Service Insurer Insurer that offers relatively small policies with premiums payable on a weekly basis.A.k.a. Career agents Captive AgentsWorks for only one insurer and sells only that insurers products Is self-governing and actually works for himself. This Independent Agents affords him the versatility to represent several insurers and their different insurance products.Usually not license and don't sell insurance. Assist Special Agents insurance companies field representatives.(GA) - Build sales staffs and agents are treated as Career Agency System employees. They are recruited and trained. A principal of the company supervises agents.(PPGA) - The agent supplies his own working Personal Producing environment. Agents hired by a PPGA are considered General Agency System employees of the PPGA, not the insurance company, and are supervised by the regional salary.Agents represent several insurers through signed Independent Agency contracts and are paid on commission or fee basis, System not through salary.Legislation Regulating the business of The Court System insurance State Insurance Departments

• State tried to control insurance domiciled

fromanother state.

• U.S. Supreme Court sided against insurance

Paul v. Virginia company

• Upholding the right of sate to regulate insurance
• States WIN 3 / 4

United States v.- Ruling is a form of interstate commerce Southeastern- Should be regulated by the federal government Underwriters Association - Fed Gov. WINS

(SEUA)

• Gave back some regulatory authority to the states

The McCarran-Ferguson- Did not provide the states to regulate individually Act- Insurance regulated by state law "is in the publics best interest"

• Dealing with variable annuities
• Securities and Exchange Commission (SEC)

shouldregulate the variable annuities (since they're used for Intervention by SEC investments) & variable life insurance.

• Therefore, agents must obey the rules to both

SECand state regulation.

• Fair and accurate report of information

aboutconsumers

• Insurers must inform them about any investigations

Fair Credit Reporting Act being made

• Then insurers must let the applicants know the

nameof the reporting agency -Revoking the Glass-Steagall Act -This changed the industry so commercial banks, Financial Services investment banks, retail brokerages, and insurance Modernization Act companies can now enter each other's lines of business Admitted insurance- Office of Insurance Regulation has licensed them to companycarry out business in Florida Nonadmitted Insurance - Have not been licensed by the the Florida Office of CompanyInsurance Regulation

• An action which eliminates the original policy or

Policy Replacement diminishes its benefits or values

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