Wisconsin Life Insurance Exam|Latest Update
Graded A+
Mortality
The rate people will die
Morbidity
The rate people will get sick
Peril
The cause of loss and the event insured against.
Ex: premature death, dependency during old age, accident, and sickness
Adverse Selection
The tendency for poorer than average risks to seek out insurance
Annuity
Annuities protect against the risk of living longer than expected. Annuities provide a guaranteed life
income to protect against the risk of depleting retirement funds
Lloyds Associations
Described as a market where individuals and groups gather to exchange insurance, much like stock
exchanges provide a place to buy, sell and trade stocks
Risk Retention Groups
Llimited liability companies or member-owned corporations that collectively assume and spread their
members' liability risks through self-insurance. All members of a risk retention group must be
employed in similar types of businesses so that they have similar liability exposures
Express Authority
The explicit authority granted to the agent by the principal as written in the agency contract
Implied Authority
Not specifically expressed by the principal to the agent in the agency contract, but is implicit in the
agent's duties
Apparent Authority
Is a situation in which the insurer gives the customer a reasonable belief that an agent has the power
and authority to bind the principal, even in cases where the agent does not have such authority
Fair Credit Reporting Act (FCRA)
The Act requires consumer-reporting agencies to implement policies and procedures to preserve the
confidentiality, accuracy, relevance, and appropriate utilization of consumer's private credit
information
What cannot be in a consumer report unless for a life insurance policy of $150,000 or more:
, -Bankruptcies dating back more than 10 years
-Civil suits and judgments dating back more than seven years or cases in which the statute of
limitations has expired, whichever period is longer
-Tax liens dating back more than seven years
-Adverse information dating back more than seven years
-Reports of a consumer's arrests, indictments or convictions
Guaranty Associations
Provide a safety net for all member life, health and annuity insurers in a particular state
Defamation
Any false, maliciously critical, or derogatory communication - written or oral - that injures another's
reputation, fame, or character
Rebating
If a buyer of an insurance policy is given anything of significant value as an inducement to purchase or
renew a policy- saying you'll give them something in addition like a membership to a club
Twisting
The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling
another policy without regard to possible disadvantages to the policyowner- Often, it involves
encouraging an insured to lapse on their current policy and to take out another.
Churning
The practice of using misrepresentation to induce a policyholder to replace a policy issued by the
insurer the producer represents, rather than the policy of a competitor
Coercion
Generally manipulates through the prospect of something desirable
Consideration
Premium payment + application
Subrogation
The right of the insurer to assume the rights of the insured and sue the responsible third party for
damages inflicted upon the insured.
Indemnity Insurance
Insurance that compensates the beneficiaries of the policies for their actual economic losses, up to
the limiting amount of the insurance policy
Four elements that need to be in every contract:
Offer and acceptance, consideration, competent parties, legal purpose
Four main parts of a life and health insurance contract
The policy face, insuring clause, conditions, exclusions
Graded A+
Mortality
The rate people will die
Morbidity
The rate people will get sick
Peril
The cause of loss and the event insured against.
Ex: premature death, dependency during old age, accident, and sickness
Adverse Selection
The tendency for poorer than average risks to seek out insurance
Annuity
Annuities protect against the risk of living longer than expected. Annuities provide a guaranteed life
income to protect against the risk of depleting retirement funds
Lloyds Associations
Described as a market where individuals and groups gather to exchange insurance, much like stock
exchanges provide a place to buy, sell and trade stocks
Risk Retention Groups
Llimited liability companies or member-owned corporations that collectively assume and spread their
members' liability risks through self-insurance. All members of a risk retention group must be
employed in similar types of businesses so that they have similar liability exposures
Express Authority
The explicit authority granted to the agent by the principal as written in the agency contract
Implied Authority
Not specifically expressed by the principal to the agent in the agency contract, but is implicit in the
agent's duties
Apparent Authority
Is a situation in which the insurer gives the customer a reasonable belief that an agent has the power
and authority to bind the principal, even in cases where the agent does not have such authority
Fair Credit Reporting Act (FCRA)
The Act requires consumer-reporting agencies to implement policies and procedures to preserve the
confidentiality, accuracy, relevance, and appropriate utilization of consumer's private credit
information
What cannot be in a consumer report unless for a life insurance policy of $150,000 or more:
, -Bankruptcies dating back more than 10 years
-Civil suits and judgments dating back more than seven years or cases in which the statute of
limitations has expired, whichever period is longer
-Tax liens dating back more than seven years
-Adverse information dating back more than seven years
-Reports of a consumer's arrests, indictments or convictions
Guaranty Associations
Provide a safety net for all member life, health and annuity insurers in a particular state
Defamation
Any false, maliciously critical, or derogatory communication - written or oral - that injures another's
reputation, fame, or character
Rebating
If a buyer of an insurance policy is given anything of significant value as an inducement to purchase or
renew a policy- saying you'll give them something in addition like a membership to a club
Twisting
The unethical act of persuading a policyowner to drop a policy solely for the purpose of selling
another policy without regard to possible disadvantages to the policyowner- Often, it involves
encouraging an insured to lapse on their current policy and to take out another.
Churning
The practice of using misrepresentation to induce a policyholder to replace a policy issued by the
insurer the producer represents, rather than the policy of a competitor
Coercion
Generally manipulates through the prospect of something desirable
Consideration
Premium payment + application
Subrogation
The right of the insurer to assume the rights of the insured and sue the responsible third party for
damages inflicted upon the insured.
Indemnity Insurance
Insurance that compensates the beneficiaries of the policies for their actual economic losses, up to
the limiting amount of the insurance policy
Four elements that need to be in every contract:
Offer and acceptance, consideration, competent parties, legal purpose
Four main parts of a life and health insurance contract
The policy face, insuring clause, conditions, exclusions
