lifeins ch.1 - GENERAL INSURANCE A personal insurance...

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GENERAL INSURANCE A personal insurance contract is written between an insurance company and an individual, in which the company has a right to decide with whom it will and will not do business. An insured can transfer an insurance contract to another person, but he/she must first obtain the written consent of the insurer. In life and/or health insurance, the offer is usually made by the applicant, in the form of the application. Acceptance occurs when the underwriter approves the application, provided that the first premium payment accompanies the application. Otherwise, acceptance occurs when the insurer receives payment. According to the Law of Large Numbers, the larger a group becomes, the easier it is to predict losses. Insurers use this law in order to predict certain types of losses and set appropriate premiums. Since the agent is a representative of the insurer, payment to the agent represents payment to the company. AFTER a hearing, the agent's license could be revoked for engaging in such acts. Apparent authority is the appearance of, or the assumption of, authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker. V= Fiduciary responsibility. A foreign insurer is one that is formed under the laws of another state. A non-admitted or unauthorized insurer is an insurance company that has not applied, or has applied and been denied a Certificate of Authority and may not transact insurance. Adverse selection means that there are more risks with higher probability of loss seeking to purchase and
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This note was uploaded on 11/22/2010 for the course PHY 724 taught by Professor Barnes during the Spring '10 term at El Centro College.

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lifeins ch.1 - GENERAL INSURANCE A personal insurance...

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