Term
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Definition
- Private organization, incorporated under state law for the purpose of making a profit for its stockholders.
- Owners may or may not be policyholders.
- Elects a board of directors
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Term
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Definition
- Incorporated under state law and policyholders are the owners, (not stock holders)
- Pay dividends to policyholders considered a refund of extra premiums paid (not a share of the profit)
- Participating policies premiums are more expensive
- There are 5 Dividend Options
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Term
| Farternal Benefit Society |
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Definition
- Not for profit-social and chartitable organization
- Members based on religious, national or ethnic lines
- Issues certificates primarily for its members
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Term
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Definition
- Establish their own reserves to cover loss
- Also known as self-insurance
- May be used for workers compensation and pensions
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Term
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Definition
- Purchase a portion of risk for other companies.
- Insure insurers
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Term
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Definition
- Represent the insurance company
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Term
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Definition
- The agent has an ethical obligation to assess the correlation between a recommended product and the client's needs and capabilities by asking and answering questions about the client's financial needs and best interest. Some question to ask include:
- What are the client's needs?
- What product can help meet these needs?
- Does the client understand the product and its provisions?
- Does the client have the capability, financially and otherwise, to manage the product?
- Is this product in the client's best interest?
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Term
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Definition
- A generic guide that explains the various types of life insurance policies in a way that the average consumer can understand.
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Term
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Definition
- A policy summary contains specific information about the policy being recommended
- Contains the agent and insurer's name, the policy, each rider and includes information about premiums, dividends, benefit amounts, cash surrender values, loan interest rates and cost indexes
- The buyer's guide and policy summary must be delivered with the policy or prior to delivery of the policy
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Term
| Insurance Industry Regulation |
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Definition
- State regulates the insurance industry
- Securities products like variable insurance and annuities are regulated by the state and also by the SEC
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Term
| State Guaranty Associations |
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Definition
- These associations establish funds to support insurers and protect consumers against insurers becoming insolvent and being unablle to pay claims
- Guaranty associaitions are funded by their members through assesments
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Term
| Fair Credit Reporting Act |
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Definition
- Passed to protect an individual's right to privacy
- Requires fair and accurate reporting of information about consumers, including applications for insurance
- Insurers must inform consumers of investigations being made
- If a consumer report is used to deny coverage, the insurer must provide the consumer with the name of hte reporting agency
- An insurer that fails to comply is liable to the consumer actual and punitive damages
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