Wisconsin Life Insurance Course Study Guide 2023 with
complete solution
Stock Companies
-private organization focused to make profits for shareholders
-Stock dividends are paid to stock holders
-policyholders do not participate
Mutual Companies
-have no stock holders
-owners are policy owners
-policy holders can vote for members of the board
-policy owners receive dividends
Lloyd's of London
-A syndicate of individuals who underwrite insurance
Reinsurers
-are a specialized branch of the insurance industry because they insure insurers
-reinsure risk to lessen it if a large claim would be made
1945 McCarren-Ferguson Act
Insurance would be regulated by the states but would conform to federal anti trust laws
1970 Fair Credit Reporting Act
which is the authority that requires fair and accurate reporting of information about
consumers, including applicaitons for insurance. Insurers must inform applicants about
any investigations that are being made
NAIC
All State insurance commisioners or directos are members
Broad objectives
1. To encourage uniformity in state insurance laws and regulations
2. To assist in the administration of those laws and regulations by promoting efficiency
3. To protect the interest of policy owners and consumers
4. To preserve state regulations of the insurance business
State Guaranty Association
-state established guaranty funds or guaranty associations to support insurers and
protect consumers
-should an insurer be unable to pay its claims the association will step in and cover the
consumers unpaid claims
AM Best
A+
Standard and Poors or Moodys
AA-
Fitch
A1
Law of Large Numbers
This law states that larger groups provide an increased degree of accuracy in loss
predictions, based on past experience.
Speculative Risk
,is a risk that presents the chance for loss and a gain
ex. Gambling
Pure Risk
are the only insurable risks and present a potential for loss only with no possibility of
gain
ex. death
Avoidance
elimination of the hazard
Reduction
minimizing the severity of a potential loss
Retention
self insure, used when losses are highly predictable and the worst loss is not serious
Transference
Buying insurance is the best way to transfer risk
Physical Hazards
poor health, overweight, blind
Moral Hazards
dishonesty, drugs, alcohol abuse
Morale Hazards
careless attitude
Elements of Insurable Risk
loss must be
-due to chance
-definite and measurable
-predictable
-cannot be catastrophic
-exposure to be insured must be large
-loss must be randomly selected
Offer and acceptance
a definite, unqualified proposal which can be accepted but if a counter offer is made
then the first offer is void
Legal Purpose
the reason the parties enter into the agreement must be legal
Competent Parties
the insurer must be licensed or authorized while the insured is presumed competent
with three exceptions
-Minor
-The mentally infirm
-Those under the influence of alcohol or drugs
Aleatory
unequal exchange of value or consideration for both parties
Adhesion
Insurance contracts are contracts of adhesion. This means that the contract has been
prepared by one party with no negotiation between the applicant and insurer. In effect,
the applicant "adheres" to the terms of the contract on a take it or leave it basis when
, accepted. Any confusing language of the contract would be interpreted in favor of the
insured. A policy would also be considered this it the insurance company could modify
Unilateral
This means that only on party (the insurer) makes any kind of enforceable promise
-applicant does not promise to pay premiums but insurer can cancel contract if they are
not paid
personal contract
Life insurance is a personal agreement or contract between the insurer and the insured.
The owner has no bearing on the risk that the insurer has assumed. Policy owners can
give their policies away if they wish
Conditional
This means the insurer's promise to pay benefits depends on the occurrence of an
event covered by the contract. If the event does not materialize, no benefits are paid. If
the premiums are not paid the condition for keeping the contract in force no longer
exists and the companies obligation to pay is relieved
value or indemnity
a valued contract pays a stated sum regardless of the actual loss incurred. These tende
to be life insurance contracts. An indemnity contract is one that pays an amount equal
to the loss. These tend to be fire and health
Utmost good faith
Insurance applicants are required to make a fll, fair and honest disclosure of the risk to
the agent and insurer. Both parties must know all material facts and information
Warranty
a statement made by the applicant that is guaranteed to be true in every respect.
Warrenties are presumed material
Representation
a statement made by the applicant that they consider to be true and accurate to the best
of the applicants belief. A false statement is considered a material misrepresentation
Concealment
failure by the applicant to disclose a known material fact when applying for insurance. If
discovered the insurer has the option to void contract but after a period of two years the
contract can no longer be voidable for these reasons
Insurable Interest
This means that the person acquiring the contract must be subject to loss upon the
death, illness, or disability of the person being insured. To have " an insurable interest"
in the life of another person, an individual must have a reasonable expectation of
benefiting from the other person continued life
Express Authority
is the authority a principal deliberately gives to its agent
Implied Authority
is the written authority that is not expressly granted but which the agent is assumed to
have in order to transact the business of the principal
Apparent Authority
is the appearance or assumptions of authority based on the actions, words or deeds of
the principal. It can also exist because of circumstances the principal created
Waiver
complete solution
Stock Companies
-private organization focused to make profits for shareholders
-Stock dividends are paid to stock holders
-policyholders do not participate
Mutual Companies
-have no stock holders
-owners are policy owners
-policy holders can vote for members of the board
-policy owners receive dividends
Lloyd's of London
-A syndicate of individuals who underwrite insurance
Reinsurers
-are a specialized branch of the insurance industry because they insure insurers
-reinsure risk to lessen it if a large claim would be made
1945 McCarren-Ferguson Act
Insurance would be regulated by the states but would conform to federal anti trust laws
1970 Fair Credit Reporting Act
which is the authority that requires fair and accurate reporting of information about
consumers, including applicaitons for insurance. Insurers must inform applicants about
any investigations that are being made
NAIC
All State insurance commisioners or directos are members
Broad objectives
1. To encourage uniformity in state insurance laws and regulations
2. To assist in the administration of those laws and regulations by promoting efficiency
3. To protect the interest of policy owners and consumers
4. To preserve state regulations of the insurance business
State Guaranty Association
-state established guaranty funds or guaranty associations to support insurers and
protect consumers
-should an insurer be unable to pay its claims the association will step in and cover the
consumers unpaid claims
AM Best
A+
Standard and Poors or Moodys
AA-
Fitch
A1
Law of Large Numbers
This law states that larger groups provide an increased degree of accuracy in loss
predictions, based on past experience.
Speculative Risk
,is a risk that presents the chance for loss and a gain
ex. Gambling
Pure Risk
are the only insurable risks and present a potential for loss only with no possibility of
gain
ex. death
Avoidance
elimination of the hazard
Reduction
minimizing the severity of a potential loss
Retention
self insure, used when losses are highly predictable and the worst loss is not serious
Transference
Buying insurance is the best way to transfer risk
Physical Hazards
poor health, overweight, blind
Moral Hazards
dishonesty, drugs, alcohol abuse
Morale Hazards
careless attitude
Elements of Insurable Risk
loss must be
-due to chance
-definite and measurable
-predictable
-cannot be catastrophic
-exposure to be insured must be large
-loss must be randomly selected
Offer and acceptance
a definite, unqualified proposal which can be accepted but if a counter offer is made
then the first offer is void
Legal Purpose
the reason the parties enter into the agreement must be legal
Competent Parties
the insurer must be licensed or authorized while the insured is presumed competent
with three exceptions
-Minor
-The mentally infirm
-Those under the influence of alcohol or drugs
Aleatory
unequal exchange of value or consideration for both parties
Adhesion
Insurance contracts are contracts of adhesion. This means that the contract has been
prepared by one party with no negotiation between the applicant and insurer. In effect,
the applicant "adheres" to the terms of the contract on a take it or leave it basis when
, accepted. Any confusing language of the contract would be interpreted in favor of the
insured. A policy would also be considered this it the insurance company could modify
Unilateral
This means that only on party (the insurer) makes any kind of enforceable promise
-applicant does not promise to pay premiums but insurer can cancel contract if they are
not paid
personal contract
Life insurance is a personal agreement or contract between the insurer and the insured.
The owner has no bearing on the risk that the insurer has assumed. Policy owners can
give their policies away if they wish
Conditional
This means the insurer's promise to pay benefits depends on the occurrence of an
event covered by the contract. If the event does not materialize, no benefits are paid. If
the premiums are not paid the condition for keeping the contract in force no longer
exists and the companies obligation to pay is relieved
value or indemnity
a valued contract pays a stated sum regardless of the actual loss incurred. These tende
to be life insurance contracts. An indemnity contract is one that pays an amount equal
to the loss. These tend to be fire and health
Utmost good faith
Insurance applicants are required to make a fll, fair and honest disclosure of the risk to
the agent and insurer. Both parties must know all material facts and information
Warranty
a statement made by the applicant that is guaranteed to be true in every respect.
Warrenties are presumed material
Representation
a statement made by the applicant that they consider to be true and accurate to the best
of the applicants belief. A false statement is considered a material misrepresentation
Concealment
failure by the applicant to disclose a known material fact when applying for insurance. If
discovered the insurer has the option to void contract but after a period of two years the
contract can no longer be voidable for these reasons
Insurable Interest
This means that the person acquiring the contract must be subject to loss upon the
death, illness, or disability of the person being insured. To have " an insurable interest"
in the life of another person, an individual must have a reasonable expectation of
benefiting from the other person continued life
Express Authority
is the authority a principal deliberately gives to its agent
Implied Authority
is the written authority that is not expressly granted but which the agent is assumed to
have in order to transact the business of the principal
Apparent Authority
is the appearance or assumptions of authority based on the actions, words or deeds of
the principal. It can also exist because of circumstances the principal created
Waiver
