UPDATED Health Insurance (Exam FX) Questions And Answers 100% Correct A Grade.

Agent/Producer - ANSWERS-A legal representative of an insurance company Broker - ANSWERS-An insurance producer not appointed by an insurer and whom represents the client Insured - ANSWERS-A person covered by an insurance policy Insurance policy - ANSWERS-A legal contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured/beneficiary for losses caused by specific events Principal - ANSWERS-Insurer, company who issues insurance policies Policyowner - ANSWERS-The person entitled to exercise the rights and privileges in a policy Premium - ANSWERS-The money paid to the insurance company for the insurance policy Reciprocal - ANSWERS-A mutual interchange of rights and privileges Risk - ANSWERS-Chance of a loss occurring Pure Risk - ANSWERS-Situations that can only result in a loss Speculative Risk - ANSWERS-Situations that can result in either a loss or gain Hazard - ANSWERS-Conditions or situations that increase the chance of a loss occurring Physical Hazard - ANSWERS-Individual characteristics that increase the chance of a loss (i.e. past medical history, blindness) Moral Hazard - ANSWERS-Tendencies towards increasing risk such as lying on applications or submitting fraudulent claims Morale Hazard - ANSWERS-Arise from a state of mind that causes indifference to loss such as carelessness Peril - ANSWERS-Specific cause of a loss such as death, sickness or accidents Loss - ANSWERS-Reduction, decrease, or disappearance of value of the person or property caused by a named peril Sharing - ANSWERS-Method of dealing with risk where a group with the same or similar exposure to loss divvy up the losses that occur within that group; reciprocal insurance exchange is a formal risk-[ ? ] arrangement Transfer - ANSWERS-Most effective way to handle risk; relieves the insured of the financial losses risks can bring Avoidance - ANSWERS-Completely eliminating exposure to loss; effective but seldom practical Retention - ANSWERS-AKA self-insurance; insured accepts responsiblity for the loss before the insurance company pays through use of deductibles and co-payments Reduction - ANSWERS-Act of lessening the possiblity or severity of a loss (i.e. making healthy changes in lifestyle) Elements of Insurable Risks - ANSWERS-Due to chance, measurable, predictable, not catastrophic, large random loss exposure Classifications of Insurers - ANSWERS-Ownership, domicile, and authority Law of Agency - ANSWERS-"The acts of the agent/producer within the scope of authority are deemed to be acts of the insurer" is known as the... Express Authority - ANSWERS-Powers granted by the insurer to the agent that are written in the contract Implied Authority - ANSWERS-Powers that the agent is presumed to have that are not explicitly written, but that are needed to conduct business (i.e. collecting and remitting premiums) Apparent Authority - ANSWERS-AKA Perceived; refers to a situation where a reasonable third party would believe an agent had certain powers (i.e. using the insurer's stationary, applicant believes the agent is authorized to transact business on the insurer's behalf) Fiduciary Responsibility - ANSWERS-Being in position of trust Elements of a Legal Contract - ANSWERS-Agreement (offer and acceptance), consideration, competent parties, and legal purpose Offer - ANSWERS-Element of a legal contract; applicant does this when submitting the application Acceptance - ANSWERS-Element of a legal contract; when an insurer approves of an offer in its exact terms and issues a policy Consideration - ANSWERS-Element of a legal contract; something of value that each party gives to each other Competent Parties - ANSWERS-Element of a legal contract; legal age, metally competent, not under the influence of drugs or alcohol Legal Purpose - ANSWERS-Element of a legal contract; not against public policy Indemnity - ANSWERS-To restore, but not allow profit from a loss Representations - ANSWERS-Statements believed to be true to the best of one's knowledge, but are not guaranteed to be true Misrepresentation - ANSWERS-An untrue statement Material Misrepresentation - ANSWERS-An untrue statement that would alter the underwriting decision Fraud - ANSWERS-Making an untrue statement with the intention of altering the underwriting decision; to deceive or cheat a party Warranty - ANSWERS-Absolutely true statement upon which the validity of the insurance policy depends Concealment - ANSWERS-Withholding of information of a material fact that i scrucial in making a decision Coinsurance - ANSWERS-An agreement between an insurer and insured in which both are expected to pay a certain portion of the loss Comprehensive Coverage - ANSWERS-Health insurance that provides protection for most types of medical expenses Copayment - ANSWERS-An arrangement in which an insured must pay a specified amount for services "up front" Deductible - ANSWERS-The portion of the los that is to be paid by the insured before any claim may be paid by the insurer Insolvent - ANSWERS-Unable to meet financial obligations