Life and Health License Maine Solved 100% Correct!!
Lapse
policy termination due to nonpayment of premium
Premium
amount paid to the insurance company for the insurance policy
"Insurance Transaction" (by email or other means)
Solicitation
Negotiations
Sale
Advising an individual concerning coverage or claims
Elements of legal contract to be legally binding
(4 Essential elements)
1. Agreement
2. Consideration
3. Competent Parties
4. Legal Purpose
Consideration
(contract)
Is something of value that each party gives to another.
Insured = payment on premium
Insurer = promise to pay in event of loss.
Competent Parties
Must be entering contract in eyes of the law.
-Both parties must be legal age, mentally competent, not under influence of alcohol or
drugs.
Contract of Adhesion
prepared by one party (insurer) and accepted or rejected by the other party.
Aleatory Contract
Means exchange of unequal amounts or values. Premium paid is small in relation to
amount paid by insurer in event of loss.
Unilateral Contract
Only one parties to the contract is legally bound to do anything.
(Insured = no legally binding promises, Insurer promises to pay losses covered by
policy)
Conditional Contract
Certain conditions met by policy owner and company in order for the contract to be
executed. (Proof of loss...)
Warranty
Absolutely true statement upon which the validity of insurance policy depends.
Representations
Statements believed to be true to best of one's knowledge.
Misrepresentations & Material Misrepresentations can lead to.....
FRAUD
"Completing application"
, 2 basic Parts:
Part 1: general information
Part 2: Medical information
Agent's Report
Provides the agents personal observations concerning the proposed insured.
Changes in Application
Should have applicant initial the change or complete a new application.
Consequences of Incomplete Application
Incomplete then must return it to applicant. If a policy is issued with questions left,
insurer waived it right to have an answer to the question.
Collecting premium
Whenever agent collects premium, must issue "premium receipt."
"Conditional receipt" is used only when the applicant submits a prepaid application.
Replacement
Terminating policy or letting it lapse, and getting a new one.
Underwriting
Risk selection process. Underwriter responsible for selecting only those risks that are
considered insurable and meet insurer's standards.
Sources of underwriting information
Application
Agent's Report
Investigative Consumer Report (Inspection)
Underwriter can order inspection from investigation firm or credit agency. (subject to fair
credit reporting act)
Fair Credit Reporting Act
est. procedures that consumer-reporting agencies must follow.
Consumer Reports
written / oral information regarding consumers credit, character, reputation, or habits.
Investigative consumer reports
Similar to Consumer report but use information from friends, neighbors and associates.
Medical Information Bureau (MIB)
(A nonprofit trade organization) Owned by member insurance companies, receives
medical information from insurance companies and maintains confidential information.
Medical Examinations
Two kinds:
1. Paramedical report - completed by paramedic or registered nurse.
2. Attending Physician's Statement (APS)
HIPAA (Health Insurance Portability and Accountability ACT)
federal law that protects health information.
Risk Classification
If accepted:
-Standard
-Substandard (High Exposure)
-Preferred
Stranger Originated Life Insurance (STOLI)
Lapse
policy termination due to nonpayment of premium
Premium
amount paid to the insurance company for the insurance policy
"Insurance Transaction" (by email or other means)
Solicitation
Negotiations
Sale
Advising an individual concerning coverage or claims
Elements of legal contract to be legally binding
(4 Essential elements)
1. Agreement
2. Consideration
3. Competent Parties
4. Legal Purpose
Consideration
(contract)
Is something of value that each party gives to another.
Insured = payment on premium
Insurer = promise to pay in event of loss.
Competent Parties
Must be entering contract in eyes of the law.
-Both parties must be legal age, mentally competent, not under influence of alcohol or
drugs.
Contract of Adhesion
prepared by one party (insurer) and accepted or rejected by the other party.
Aleatory Contract
Means exchange of unequal amounts or values. Premium paid is small in relation to
amount paid by insurer in event of loss.
Unilateral Contract
Only one parties to the contract is legally bound to do anything.
(Insured = no legally binding promises, Insurer promises to pay losses covered by
policy)
Conditional Contract
Certain conditions met by policy owner and company in order for the contract to be
executed. (Proof of loss...)
Warranty
Absolutely true statement upon which the validity of insurance policy depends.
Representations
Statements believed to be true to best of one's knowledge.
Misrepresentations & Material Misrepresentations can lead to.....
FRAUD
"Completing application"
, 2 basic Parts:
Part 1: general information
Part 2: Medical information
Agent's Report
Provides the agents personal observations concerning the proposed insured.
Changes in Application
Should have applicant initial the change or complete a new application.
Consequences of Incomplete Application
Incomplete then must return it to applicant. If a policy is issued with questions left,
insurer waived it right to have an answer to the question.
Collecting premium
Whenever agent collects premium, must issue "premium receipt."
"Conditional receipt" is used only when the applicant submits a prepaid application.
Replacement
Terminating policy or letting it lapse, and getting a new one.
Underwriting
Risk selection process. Underwriter responsible for selecting only those risks that are
considered insurable and meet insurer's standards.
Sources of underwriting information
Application
Agent's Report
Investigative Consumer Report (Inspection)
Underwriter can order inspection from investigation firm or credit agency. (subject to fair
credit reporting act)
Fair Credit Reporting Act
est. procedures that consumer-reporting agencies must follow.
Consumer Reports
written / oral information regarding consumers credit, character, reputation, or habits.
Investigative consumer reports
Similar to Consumer report but use information from friends, neighbors and associates.
Medical Information Bureau (MIB)
(A nonprofit trade organization) Owned by member insurance companies, receives
medical information from insurance companies and maintains confidential information.
Medical Examinations
Two kinds:
1. Paramedical report - completed by paramedic or registered nurse.
2. Attending Physician's Statement (APS)
HIPAA (Health Insurance Portability and Accountability ACT)
federal law that protects health information.
Risk Classification
If accepted:
-Standard
-Substandard (High Exposure)
-Preferred
Stranger Originated Life Insurance (STOLI)
