1
Q
insurance
A
- transfers the risks of loss from an individual to an insurer
- based on the principle of indemnity (security/protection)
- based on the spreading of risk (risk pooling) and the law of large
2
Q
insurable interest
A
- must exist at the time of application
- insuring one’s own life, family member, or business partner
3
Q
field underwriter (by agent)
A
- application - completed and signed
- agents report - agents’ observations about the applicant that can assist in underwriting
- premiums with application and conditional receipts
4
Q
company underwriting
A
- multiple sources of information: application, consumer reports, MIB
- risk classification - 3 types of risks: standard, substandard, preferred
5
Q
premium determination
A
- 3 key factors for life insurance: mortality, interest, and expense
- mode - the more frequently premium is paid the higher the premium
6
Q
policy issue and delivery
A
effective date of coverage - if the premium is not paid t=with the application, the agent must obtain the premium and a statement of continued good health at the time of policy delivery
